Bed Bath & Beyond in Talks to Sell Assets

Bed Bath & Beyond, the struggling home goods retailer, is in talks with the private equity firm Sycamore Partners to sell assets, including its Buy Buy Baby stores, as part of a possible bankruptcy process, people familiar with the matter said. The retailer is also in talks with other suitors about possible transactions.

Buy Buy Baby’s fall hasn’t been as sharp as that of its parent, the DealBook newsletter reports. Bed Bath & Beyond overexpanded and struggled to remain competitive, but Buy Buy Baby has maintained a strong position in a clearly defined market, and its fall in sales has been less pronounced.

On Tuesday, the company said the decrease in Buy Buy Baby’s third-quarter sales was in the low 20 percent range compared with the year before, while Bed Bath & Beyond’s sales declined 34 percent. In 2020, the infant and children’s goods chain generated about $1 billion in sales, according to an investor presentation.

Bed Bath & Beyond said this month that it was looking for fresh funds after a disappointing holiday season, including a sale of itself in pieces or as a whole. Buy Buy Baby remains a crown jewel for the retailer, but it might be difficult to sell the business as a stand-alone unit, because creditors might resist losing what is arguably the company’s most valuable entity. One way to get around that is for potential buyers to acquire the entire company and close a number of Bed Bath & Beyond locations, one of the sources said.

Discussions with various parties are continuing, however, and may not result in any deal. The people with knowledge of the talks spoke on the condition of anonymity because the conversations were confidential.

A spokeswoman for Bed Bath & Beyond reiterated that multiple paths “are being explored.” A spokesman for Sycamore declined to comment.

Sycamore knows the distressed retail market well. The firm has acquired a range of retailers, including the big-box office supplier Staples, the department store Belk and the women’s apparel chain Talbots. Stefan Kaluzny, founder of the private equity firm, has years of experience and relationships in the retail and consumer sectors. His interest in pieces of Bed Bath & Beyond may foreshadow the kind of deal-making expected this year if the traditional financing market remains stuck.

In the wake of Bed Bath & Beyond’s bankruptcy warning this month, its stock took off. In shades of the meme-stock frenzy of 2021, its shares more than tripled over five trading sessions, before falling 30 percent on Friday.

As the company explores options, it is continuing to move forward with plans to close 150 of its stores, which were announced in August as part of an aggressive restructuring plan. The retailer is trying to rebuild its inventory and again stock its stores with more recognizable national brands — something it had moved away from over the past couple of years.

But the process will take time, Sue Gove, the chief executive of Bed Bath & Beyond, said on Tuesday while on a call with analysts. This week, the company began another round of corporate layoffs, which Ms. Gove said would save an additional $80 million to $100 million. Employees started receiving pink slips shortly after the call ended.