Formerly Bankrupt Retail Giant Makes Major Expansion Move

When a brand has a cult following as big as this one, not even declining sales, a mass shutdown, or bankruptcy can stop it from overcoming so many odds. 

This retail giant helped teenagers redecorate their rooms during an identity crisis, provided college students with the necessary supplies to set up college dorms, and eased the stress of those looking to equip a new home. 

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Unfortunately, Bed Bath & Beyond filed for Chapter 11 bankruptcy in April 2023 after over 50 years of business, having accumulated $1.8 billion in long-term debt.

At the time of the filing, it had 360 Bed Bath & Beyond stores and 120 buybuy BABY locations, which it was forced to close.

Related: Popular formerly bankrupt retail chain makes brick-and-mortar comeback

However, Beyond Inc. BYON, formerly Overstock  (OSTK) , acquired Bed Bath & Beyond for $21.5 million two months later. This transaction excluded the company's brick-and-mortar business and the buybuy BABY brand, causing the brands to split and marking the end of its physical stores, transforming it into a fully online retailer.

But Bed Bath & Beyond didn't stay away from physical stores for long. 

Image source: rblfmr/Shutterstock

Beyond and Kirkland's sign the beginning of a profitable partnership

In October, Beyond struck a deal with Kirkland's  (KIRK) , allowing it to sell Bed Bath & Beyond  (BBBY)  products at its locations and making it the exclusive licensee to develop physical stores with a smaller format.

Now that Bed Bath & Beyond has reestablished its brick-and-mortar presence, it was time to reunite it with its former sister brand, something Beyond had intended to do from the start. 

Beyond acquired buybuy BABY in February this year, with a similar goal of reviving the brand and returning its merchandise to brick-and-mortar settings.

Related: Formerly bankrupt retail giant finalizes deal to return to physical stores

The company hit the ground running, relaunching Buybuy BABY's online store on May 8. Because of Beyond's agreement with Kirkland's, the company may also sell buybuy BABY merchandise and open physical stores for the brand.

However, this acquisition was just another step in a bigger upcoming expansion.

During its latest earnings call, Beyond revealed plans to open at least four Overstock stores and launch a new Bed Bath & Beyond branch called "Bed Bath & Beyond Home," intended to be a physical standalone store focused on home decor. 

Beyond expands its relationship with Kirkland's

Beyond and Kirkland announced on May 12 that they have entered into an agreement through which Beyond is to acquire Kirkland's intellectual property for $5 million, with intentions to license the trademarks back to Kirkland's.

Additionally, Beyond closed a $5.2 million deal to expand the existing credit facility with Kirkland's.

"The upsized facility strengthens Kirkland's financial position, providing flexibility for general working capital purposes and support for the company's updated store conversion strategy," stated Kirkland's in the announcement on its website.

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This new deal has resulted in changes to the existing agreement between the two companies. 

Beyond's "collaboration fee" has increased from 0.25% to 0.50% on Kirkland’s brick-and-mortar retail revenue. This eliminated Kirkland's 3% royalty obligation to Beyond for all store sales generated by Bed Bath & Beyond.

Kirkland's is now also allowed to open and operate Bed Bath & Beyond Home and buybuy BABY stores, while Beyond now has a say on Kirkland's board and may acquire up to 65% of its capital stock.

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