It was less than 15 months ago when people were talking about it being worth close to $1 billion. Even six months ago they were tossing around figures of $500 to $600 million. When it came up for auction last month there were reported to be any number of interested parties willing to pay decent money to keep it in business.
Yet last week it was announced that the digital pieces of BuyBuy Baby would be sold for a meager $15 million and change. And the buyer says they are not interested in any of the stores, which will be liquidated and shut down over the next few weeks.
What happened?
They say everything in life is timing and the sad saga of the BuyBuy Baby division of the former Bed Bath & Beyond is yet another example of how management of the company during its final days consistently mismanaged the process of trying to keep the company afloat. Had the executives – and the go-along/get-along board behind them – spent more time working on a long-term restructuring plan and less on absurd, short-term bandages that only postponed the inevitable we might be talking about a very different outcome for the retailer today.
The Baby story is really quite representative of this entire travesty. In May of 2022 rogue investor Ryan Cohen– who makes Carl Icahn look friendly – announced he had bought a 10% stake in Bed Bath and was recommending a number of initiatives, including putting the Baby division up for sale. Speculation at the time suggested that the unit could fetch as much as $1 billion from interested parties.
Of course Cohen instead took his money and ran, cashing in his stake not too long after for a tidy profit and the whole idea of selling off Baby left with him.
Months later as the parent company continued to meltdown and any meaningful efforts to save it ground to a halt, outsiders remained interested in the Baby brand, which had about 120 stores, was doing some $1.5 billion in business and was believed to be profitable, although Bed Bath never broke down any metrics for its individual units.
Again, management circled the wagons around its remaining businesses and while it said it was exploring all options, there never seemed to be any real intent to offload Baby and use the proceeds to prop up the mothership. Even earlier this year, when it was clear to everyone but the company’s leaders themselves that the end was near, the $500-$600 million range was being bandied about as a fair price for Baby.
When Bed Bath filed for bankruptcy in April, it maintained it would accept any and all offers for any and all of its pieces but by that time it was talking about damaged goods. The parent brand went for a meager $21.5 million to Overstock.com – a certifiable steal it seems – while there did seem to be multiple interested parties who looked like they were going to bid on Baby.
But last week, all but one of them was gone and Dream on Me, which was described as a former supplier to the Baby stores, was the last bidder standing, submitting a $15.5 million offer for the intellectual properties and assorted digital bits and bytes of the brand. The stores were not part of the deal and their liquidation close-out events continued, paralleling those of Bed Bath.
So in a matter of about 14 months, the Baby division ended up going for less than 2 percent of what it could have been worth in May of last year. That’s a potential $985 million less that could have been used to pay creditors and suppliers as well as used for severance pay for the thousands of employees who will no longer have jobs.
You have to wonder whether the company’s management really believed they could save the entire corporation or if all of those financing schemes were just stunts to make themselves look good. If it was only about keeping their jobs, wouldn’t they have tried everything possible to keep the company afloat and out of bankruptcy court? Wouldn’t selling off Baby – as well as subletting themselves all of those valuable store leases that are now garnering serious interest from other Big Boxes willing to pay premium prices for these desirable spaces – been the right plan for Bed Bath & Beyond? These are not stupid people so we will forever be asking the questions of why they chose to do the things they did…and didn’t do.
There’s some clever joke in all of this about throwing out the Baby with the Bath water…except it’s not funny. The tragedy of Bed Bath & Beyond seems to have no end in sight.
WarrensReport 