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Bed Bath & Beyond stock jumps on report company received bids for BuyBuy Baby unit

Key Points
  • Bed Bath & Beyond has received interest from companies that want to buy its BuyBuy Baby business, according to a Wall Street Journal report.
  • The home goods retailer agreed last month that it would explore whether it should sell or spin off that banner, as part of a settlement with activist investor and GameStop Chair Ryan Cohen.
  • The baby gear business has been a bright spot for Bed Bath, especially as it struggles with supply chain challenges and undergoes a broad turnaround effort.

In this article

A view of the atmosphere during the Whitney Port & Bundle Organics #MomAsYouAre buybuyBABY product launch in Torrance, California.
Randy Shropshire | Getty Images

Bed Bath & Beyond's shares jumped Friday on news that the company is considering offers to buy its BuyBuy Baby business.

Shares closed the day at $17.46, up 6.85%.

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, chair of GameStop and co-founder of Chewy, who owns a stake in the company through his firm RC Ventures. As part of the deal, Bed Bath agreed to do a strategic review of BuyBuy Baby, one of the bright spots of the company's business. It also agreed to add three new directors to its board as part of the truce.

Tritton said in an earnings call in April that the board had already begun some of that work by agreeing in January to form a committee "solely focused on what is the best way of unlocking the value of the BuyBuy Baby asset."

The company did not respond to requests for comment about interest in the baby retailer.

Led by CEO and Target veteran Mark Tritton, Bed Bath & Beyond is trying to refresh its stores and its brand. Yet investors — including Cohen — have grown impatient as the company has put up declining sales numbers and struggled with supply chain bottlenecks.

Same-store sales dropped 12% across Bed Bath's business in the most recent quarter that ended Feb. 26, compared with the year-ago period. Over the past two quarters, Bed Bath said it has missed out on a total of about $275 million in sales as it struggles to move merchandise out of ports and onto shelves, causing many popular items to be out of stock.

BuyBuy Baby's same-store sales, on the other hand, grew by low single digits in the most recent quarter.

In an interview with CNBC in mid-April, Tritton said Bed Bath's namesake store banner and the baby banner are in different stages. "Where we have one business going through a reformation, we have another one going through accelerated growth" he said.

He said shareholders aren't giving the parent company credit for the growth of the baby business.

But, he said, "there is no definitive sense that we will spin off BuyBuy Baby. What we've agreed to do is review the strategic priority of BuyBuy Baby and how do we unlock the shareholder value more profitably. And there are a number of options on the table."