Bed Bath & Beyond has entered into a definitive agreement to sell its Cost Plus World Market banner to private equity firm Kingswood Capital Management for an undisclosed amount.
The deal includes 243 brick-and-mortar stores, the banner's digital business, two distribution facilities and a California-based corporate office, according to a Monday press release.
- Bed Bath & Beyond, which initially acquired Cost Plus World Market in 2012, expects the deal to close before the end of its fiscal year in February, subject to customary closing conditions.
With the announced deal to sell off its Cost Plus World Market banner, Bed Bath & Beyond's only remaining non-core asset, the company is left with its namesake, BuyBuy Baby, Harmon Face values and its Decorist businesses.
Since CEO Mark Tritton took the helm late last year, he has worked to overturn his C-suite, reduce the company's store footprint and sell off other non-core banners — like One Kings Lane, PersonalizationMall.com and Christmas Tree Shops — to help steer the company back on the right track.
"We've taken deliberate steps throughout the year to streamline our portfolio and fortify our strategic focus in Home, Baby and Beauty & Wellness, and today's announcement represents the conclusion of this work," Tritton said in a statement, adding that in the course of selling off the five businesses this year, it has reduced its lease liability and overall debt. "These actions provide greater financial flexibility to support our digital first, omni-always transformation and our commitment to deliver sustainable total shareholder return," he said.
The company, however, faced pressure from activist investors to sell its non-core businesses well before Tritton's arrival. The group in April 2019 urged Bed Bath & Beyond to review its portfolio and sell off banners to increase its cash flow. And while a deal amount was not named on Monday, Wedbush analyst Seth Basham previously pegged Cost Plus World Market's value at approximately $200 million.
Cost Plus World Market may have been hurt by the pandemic as consumers remain wary of shopping in stores, a key component to its success, GlobalData Managing Director Neil Saunders said. "Although it has a reasonable number of loyal customers, Cost Plus World Market relies on high levels of passing footfall to make its business work," Saunders said in emailed comments. "This issue may resolve itself in 2021, but Bed Bath & Beyond does not want to run the risk of having another brand to fix in addition to remedying the problems at its main banner."
Bed Bath & Beyond appears to be well positioned to turn its business around, which has suffered for years from declining sales and market share. Any capital produced from the banner sale will allow the company to invest further into improving its stores and enhancing its online capabilities. Additionally, the company in recent months has proved to be among the few beneficiaries of the pandemic. Consumers have invested more into their homes as it's the place where they're forced to spend the majority of their time. Bed Bath & Beyond in October reported its first comp sales growth since 2016, of 6%.