Brookstone gets more than $65M in winning Ch. 11 bid
UPDATE: October 3, 2018: Bluestar Alliance, together with Apex Digital, put in the winning bid for Brookstone at auction and plan to operate the novelty retailer as a going concern, according to a press release. The firms' bid values Brookstone at between $66 million to $74 million, including cash and the assumption of liabilities. The buyers plan to keep operating "substantially all" of Brookstone's airport retail stores and its distribution center, as well as an operating team in New Hampshire.
- Brookstone has secured a $56.35 million baseline bid for its assets that will set the floor at a bankruptcy auction slated to take place on Sept. 26.
- The bid from brand holding company Bluestar Alliance — which owns the bebe, kensie, Tahari and nanette lepore brand properties, among others — would provide $50.5 million in cash and at least $5.9 million in salable inventory, according to a press release from Bluestar. It would also keep at least 50 Brookstone stores open, with a penalty of $400,000 if it opts not to do so or does and then fails to keep at least 30 stores open, Bluestar said.
- Bluestar's bid won stalking horse status after a back-and-forth bidding war with Authentic Brands Group, which made a play for the baseline bid with a $35 million offer in August. As recently as Sept. 2, ABG had offered $50 million for rights to the baseline bid, according to a court filing from a group of Brookstone's unsecured creditors, who opposed a previous bid from Bluestone in favor of ABG's.
Bankrupt retailers are not without value in the eyes of the market, as Brookstone's own history can attest. The novelty and gadget seller went through Chapter 11 not five years ago, changed ownership and then chugged along selling $8,500 massage chairs and $50 space-age wine openers before it hit the financial skids once again.
Brookstone, which filed again in August with a plan to sell itself, would be an odd complement to either Bluestar or Authentic Brands. (Both companies, and other players, are free to keep bidding each other up in the run-up to the bankruptcy auction, and then players that submit qualified bids can keep running up the price at auction.)
Both holding companies have focused on apparel brands, with Bluestar focused on fashion brands and ABG focused on much of the same as well as legacy brands tied to celebrities (including Elvis Presley and Shaquille O'Neal). ABG has also of late snatched up brands that have lost some, but not all, of their value, such as Nautica and Nine West/Bandolino, the latter of which represented ABG's furthest journey from apparel so far, into accessories.
"While Brookstone is obviously not an apparel brand, it does have a well recognized brand name in the retail space, having been around since 1965," Moody's analyst Brian Silver told Retail Dive in August. "We view Brookstone as a hybrid, in that it is both a brand from another era and a challenged brand that has underperformed but not necessarily fallen out of favor with consumers.”
Now both ABG and Bluestar are eyeing Brookstone, known for its curiosities that have lured mall browsers for years into its stores for decades to try — if not buy — vibrating furniture and memory foam neck pillows. Brookstone's reliance on malls can largely explain its sagging sales and return to bankruptcy. On filing, the company said it planned to wind down its mall business to focus on e-commerce, wholesale and its successful airport retail operations.
Brookstone is certainly not alone in winning buyer interest. Claire's has been the subject of wrangling among various groups of investors who want to buy and operate the teen retailer in bankruptcy. Bon-Ton's intellectual property recently got snatched up by a tech company that wants to run it both as an e-tailer and a much-downsized physical retailer. And Reuters has reported that Toys R Us' IP, which goes up for auction next month, could fetch a record amount. Not to mention scores of other brands that have survived bankruptcy and retail failure to continue in some form to capitalize on what cache they have left with customers.
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