As part of its strategy to stabilize sales and focus on its core brand, home goods retailer Bed Bath & Beyond Inc. BBBY announced on Monday it is selling Cost Plus World Market to Kingswood Capital Management.
While the specifics of the deal with the Los Angeles-based private equity firm were not disclosed, Bed Bath & Beyond said the agreement includes 243 brick-and-mortar locations, the retailer's digital business, two distribution facilities and a corporate office located in Alameda, California. Cost Plus World Market, which sells a wide variety of home furniture, décor, gifts, apparel, coffee, wine, beer and international food products, will continue to operate as a standalone brand after the deal closes.
The sale of the specialty retailer is another step in the turnaround efforts being spearheaded by President and CEO Mark Tritton, who joined the company in November 2019 after leading a successful transformation at Target Corp. TGT. For the past several years, Bed Bath & Beyond's revenue has been relatively stagnant while its net income declined from $1.03 billion in 2013 to a loss of $614 million in fiscal 2020.
In October, Tritton unveiled a three-year plan for getting the company back on track, which includes shutting down underperforming stores and focusing on gaining market share in the home and baby categories. Starting in the spring, Bed Bath & Beyond also plans to launch more than 10 new private-label brands.
Earlier this year, the Union, New Jersey-based company announced the sale of Christmas Tree Shops and Linen Holdings as well as a distribution center. Those agreements all closed in November.
"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 all, we have unlocked significant value from the divestiture of five business concepts this year, and we have also meaningfully reduced our 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."
Bed Bath & Beyond also announced it is increasing stock buybacks, approving a $150 million share repurchase program on top of the $225 million program it revealed back in October. Both are expected to be completed by the end of February 2021, which is when it also anticipates the sale of Cost Plus World Market will be concluded.
Shares of Bed Bath & Beyond were up 1.11% at $19.17 on Monday, yielding a $2.42 billion market cap. Year to date, GuruFocus data shows the stock has gained roughly 10%.
Disclosure: No positions.
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