Activist company

Bed Bath & Beyond shares jump after company receives offers for BuyBuy Baby unit

A view of the atmosphere at the Whitney Port & Bundle Organics #MomAsYouAre buybuyBABY product launch on November 17, 2018 in Torrance, California.

Randy Shropshire | Getty Images

Shares of Bed Bath & Beyond jumped on news that the company was considering bids to buy its BuyBuy Baby business.

The news was reported by the Wall Street Journal, which cited unnamed sources. According to the report, private equity firm Cerberus Capital Management and Tailwind Acquisition are among the companies interested in the baby apparel and supplies retailer.

The home goods retailer recently struck a deal with activist investor Ryan Cohen, chairman of GameStop and co-founder of Chewy, who has a stake in the company through his company RC Ventures. As part of the deal, Bed Bath has agreed to conduct a strategic review of BuyBuy Baby, one of the strengths of the company’s business. It also agreed to add three new directors to its board as part of the truce.

The company did not immediately respond to requests for comment.

Led by CEO and Target veteran Mark Tritton, Bed Bath & Beyond is trying to refresh its stores and brand. Still, investors – including Cohen – grew impatient as the company saw a drop in sales and struggled with supply chain bottlenecks.

Same-store sales fell 12% across Bed Bath’s business in the most recent quarter that ended Feb. 26, compared to the year-ago period. Over the past two quarters, Bed Bath said it missed a total of around $275 million in sales as it struggled to move goods out of ports and onto shelves, causing many to go out of stock. popular items.

BuyBuy Baby’s same-store sales, on the other hand, rose by low single digits in the last quarter.

In an interview with CNBC in mid-April, Tritton said the eponymous Bed Bath store banner and the baby banner were at different stages. “Where we have a company going through reform, we have another company experiencing accelerated growth,” he said.

He said shareholders did not give the parent company credit for the growth of the baby business.

But, he said, “there is no definitive sense that we will try BuyBuy Baby. What we have agreed to do is review BuyBuy Baby’s strategic priority and how to unlock shareholder value. more cost-effectively. And there are a number of options on the table.”