Bed Bath & Beyond on Tuesday announced plans to sell its Christmas Tree Shops banner to Handil Holdings in a deal expected to close next month.
As part of the purchase agreement, Bed Bath & Beyond has agreed to hand over all 80 brick-and-mortar Christmas Tree Shops locations as well as a distribution center located in Middleborough, Massachusetts. Handil will continue to operate the banner as a stand-alone business, according to a company press release.
Bed Bath & Beyond has also agreed to sell two other non-core assets in deals expected to close this month: a distribution center in Florence, New Jersey, and its Linen Holdings business, which provides linens, terry and apparel, among other things, to the hospitality and healthcare industries. The combination of the three asset sales is expected to generate about $250 million.
Bed Bath & Beyond purchased Christmas Tree Shops back in 2003 for $200 million in cash, at a time when it only operated 23 stores in six states. In the 17 years since that acquisition, the home goods retailer has nearly quadrupled the banner's presence across 20 states.
But the home goods retailer has faced struggles in recent years as online retailers and mass merchants have continued to steal share in the space, tasking CEO Mark Tritton, who joined the company just under a year ago, with a turnaround that is likely to determine the retailer's fate.
Tritton has worked over the last 11 months revamping his C-suite, reducing the workforce, closing stores and selling off other non-core assets, including One Kings Lane and PersonalizationMall.com, to help streamline the business and cut costs.
"Today's announcement builds on the purposeful steps we have made throughout the year to simplify our portfolio, unlock capital and create clear strategic focus to accelerate our plans to build our authority in the Home, Baby, Beauty and Wellness markets," Tritton said in a statement.
But the pressure to sell off the company's non-core assets came before Tritton's arrival: An activist investor group in April 2019 urged Bed Bath & Beyond to review its portfolio and sell off banners to bolster its cash flow, including Christmas Tree Shops, PersonalizationMall.com and Cost Plus World Market. With the company on Tuesday hinting at the potential to unload additional assets, a sale of Cost Plus World Market — which Wedbush analysts estimate to be worth approximately $200 million — may soon round out that trilogy.
"We look favorably on these non-core dispositions as the company continues to focus on its core Bed Bath and Buy Buy Baby businesses," Wedbush analyst Seth Basham said in an emailed note.
And the pandemic, which has hurt much of the industry, appears to have boosted Bed Bath & Beyond's turnaround prospects. Earlier this month the retailer reported its first quarterly comps increase since 2016, driven largely by an 89% year-over-year increase in its digital channels. The company this year introduced buy online, pick up in-store and contactless curbside services, and as of May, said the service would be expanded to 90% of its fleet. The company earlier this month also launched same-day delivery at its Bed Bath & Beyond and BuyBuyBaby stores through partnerships with Shipt and Instacart
"Customers are responding well to the introduction of our new omni-always services, and we will continue to invest in our digital-first experience with a customer-inspired assortment that makes it easy to feel at home with Bed Bath & Beyond," Tritton said.