The deal was described by Johnson as “an exciting and pivotal moment for our company.” Bed Bath & Beyond’s unsustainable financial and operational condition was exacerbated by mistakes in its supply chain, response to the epidemic, and operational strategy. The company filed for bankruptcy in April due to its massive long-term debt of almost $1.8 billion.
In comparison, Overstock reported having $375 million in cash at the end of Q1. On the call, CFO Adrianne Lee revealed that the company paid for its purchase of Bed Bath & Beyond’s intellectual property using cash on hand.
“The brand remains strong among consumers,” Johnson said, despite Bed Bath & Beyond’s bankruptcy. According to an independent, third-party poll Johnson claims to have done during the past few months, the brand is ranked fifth among the top 25 retailers in the category.
In response to a question from an analyst, Johnson said that the company was confident that the reimagined brand would win back customers who had been turned off by negative Bed Bath & Beyond experiences, such as widespread out-of-stock merchandise or canceled orders, as the company went bankrupt.
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Overstock to Rebrand as Bed Bath & Beyond in Bid to Revamp Image
According to my observations, management (or rather, mismanagement) can be the downfall of businesses but not of their brands. Many well-known and enduring companies defy the odds by surviving bankruptcy. We believe the Bed Bath & Beyond brand fits this description,” Johnson added.
Johnson added that the company’s name no longer reflected its core competencies. The company has announced that Overstock will be rebranded as Bed Bath & Beyond in the coming months and that it will operate under a single brand name going forward.
Stubbs Alderton & Markiles partner and consumer products practice chair Mark Brutzkus remarked. “The acquisition by Overstock makes good sense as it gives Overstock a vehicle to shift its business from big-ticket items to kitchen appliances and home decor.”
The market consensus held that Overstock only carried surplus or discontinued items. Brutzkus said in an email to Retail Dive that Overstock could reach customers it never would have been able to before thanks to the Bed Bath & Beyond brand. Johnson’s comments on the call reflected this idea.
We realized the Overstock brand mirrored our old liquidation business strategy and didn’t fit with the things we sell now,” Johnson explained. For the past two decades, we have not served as a liquidator. Overstock, which began as a warehouse store outside Salt Lake City in 1999, converted to a strictly online operation a little over a year ago.
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Overstock Rebranding Aims to Address Customer Concerns About Product Quality
We thought that becoming a one hundred percent home-focused retailer would help strengthen our brand’s connection to the domestic sphere. Johnson admitted that “that has proven more difficult than we thought.” We were unable to better connect with customers looking for high-caliber home goods because of the Overstock moniker.
Johnson said buyers attracted to the site by the name were disappointed when they couldn’t locate liquidation prices. Customers have expressed concern that “overstock” items may be damaged or otherwise subpar quality.
Johnson warned investors and analysts that “a period of volatility… as we temporarily depart from our financial recipe card” may occur during the transformation.
Johnson warned investors and analysts that the company could go through “a period of volatility… as we temporarily depart from our financial recipe card” as the transformation progresses. Examples of this uncertainty include the possibility of both decreased average order values and increased marketing costs.
However, absent Overstock’s move to buy it out of bankruptcy, similar to Radio Shack or Lord & Taylor, Bed Bath & Beyond “was destined to become a zombie retail brand.” Brutzkus added that the store’s name recognition may not have been enough to entice potential purchasers such as Authentic businesses. Simon Property Group, or private equity organizations that had acquired other struggling or insolvent retail businesses.
Concluding
None of Bed Bath & Beyond’s stores, warehouses, or inventory was included in Overstock’s purchase of the company. Any intellectual property belonging to the BuyBuy Baby or Harmon beauty brands is also not included in the sale. In January, Bed Bath & Beyond announced that it would be closing all of its Harmon locations.
The company is attempting to sell off its intellectual property, retail shops, and other brands individually. According to Brutzkus, “BuyBuy Baby apparently has some value as DTC or brick-and-mortar brand and will probably be sold at an amount equal to or greater than the price paid by Overstock for [Bed Bath & Beyond].”
FAQs
Overstock plans to rebrand as Bed Bath & Beyond in the coming months. The company has not yet released a specific date for the rebrand.
Overstock CEO said that the company believes the Bed Bath & Beyond brand is more well-known and respected than Overstock. He also said that the Bed Bath & Beyond brand is more closely aligned with Overstock’s focus on home goods.
The Overstock website will be rebranded as Bed Bath & Beyond. The company has said that it will continue to offer the same products and services on the new website.
