What Happens if Sycamore, ABG…or Someone Else Buys Bed Bath & Beyond?

If it’s indeed possible that beleaguered Bed Bath & Beyond somehow escapes filing for bankruptcy and ends up in the hands of new owners it could mean a radical change for the home furnishings Big Box.

While the speculation runs rampant that BBB will have no choice but to file chapter 11 – something the company itself will neither confirm nor deny, only saying it is exploring a number of options for its financial future – more recent reports from news sources The New York Times and CNBC are suggesting there’s another option: selling all or part of itself to another company.

Two names have surfaced as potential buyers: private equity firm Sycamore and retail and fashion brand aggregator Authentic Brands Group. Neither company is commenting on the reports and again, BBB itself continues to give its boiler plate non-response response.

Third parties buying Bed Bath, or just parts of it like the BuyBuy Baby subsidiary, introduce a new wrinkle in the ongoing drama for the retailer’s continued existence. Of course, it may still end up in bankruptcy, which generally allows a buyer more flexibility (and often less costs) than an outright sale. There remain way too many variables for any definitive answers at this point.

But what of these two potential white(ish) knights swooping in to save at least part of the day? Each is a well-known player in the retail salvage game though they come from very different places in the business ionosphere.

Sycamore Partners, described by the Wall Street Journal, as “an active buyer of distressed retail chains,” has a number of nameplates in its portfolio, including department store Belk’s, office supply chain Staples and several mall-based apparel specialists such as Ann Taylor, Express and The Limited.

Its gameplan once it takes over a company is pretty standard as these things go. It cuts costs (people and overhead), sells off bits and pieces and continues to operate what’s left. Generally it keeps a brand’s physical stores intact though it might get rid of some marginal real estate. It doesn’t necessarily have the most aggressive reputation when it comes to investing in online or in-store improvements but it also is not generally known for Eddie Lampert-style resource starvation.

Authentic, which also goes by ABG, says its mission is “to evolve, transform and reimagine global brands through innovative business models, powerful storytelling, compelling content and immersive experiences.” It does this by continuing to operate some of the stores it has acquired, selling online and licensing those brands to third parties.

It claims annual global retail sales of $23 billion for its more than 40 brands, which cut across fashion, sports and entertaining and range from names like Van Heusen, Nautica and Izod to such retailers as Brooks Brothers, Forever 21 and Frederick’s of Hollywood. It represents living and dead celebrities like Shaquille O’Neal, Marilyn Monroe and Elvis Presley. It also owns the Sports Illustrated name (but not the actual media property) and the Iconic Images art archives.

One can assume either suitor would be interested in maintaining some or most of the Bed Bath and Baby stores, although it’s quite possible each would be likely to trim the Bed Bath store count back, perhaps significantly. ABG would probably look to ramp on the e-commerce side of the business and could license out the brands to other retailers. Sycamore could use the additional stores it would get in a deal to enhance its real estate portfolio and give it more leverage with developers and mall operators.

Should either deal happen – or another buyer come along and be added to the list – it would remove the worst case scenario that the BBB empire would be liquidated, putting thousands of people out of work and hurting hundreds of vendors who currently do business with it. But the ongoing viability of the company would still depend on a strategy to get shoppers back into its stores and re-establish a relevant position in the retail marketplace.

All of this remains very much a work in progress and as each day seems to introduce a new possible scenario neither one of these potential acquisitions could actually happen. The Bed Bath & Beyond sage has had no shortages of twists and turns over the past few years. They are not likely to end anytime soon.