Online-only retailer Overstock.com is offering $21.5 million for the intellectual property of Bed Bath & Beyond, which is currently liquidating in Chapter 11.
Also known as a stalking horse bid, Overstock’s offer sets the minimum threshold for any additional bids, which must be submitted by noon on Friday to the U.S. Bankruptcy Court for the District of New Jersey. An auction, if needed, is set for 10 a.m. on June 21.
According to a court document filed Tuesday, Overstock wants Bed Bath & Beyond’s internet properties, mobile platforms, business data, and its trademarks and intellectual property. But the offer does not include any of Bed Bath & Beyond’s stores.
As of Bed Bath & Beyond’s Chapter 11 filing in April, the company had 360 U.S. stores. Earlier this year, the company closed down its 65-store Canadian business and all 50 of its Harmon beauty stores. The company also had 120 BuyBuy Baby stores at the time of its filing. That banner has also generated interest, with at least two bidders reportedly expressing interest in the baby merchandise brand.
If Overstock is the successful bidder, the company says it will deliver a 10% deposit, or $2.15 million, within one business day of the transaction’s closing.
During an April earnings call, Overstock CEO Jonathan Johnson acknowledged that the company stands to gain from Bed Bath & Beyond’s business failure. “We are well aware that Bed Bath & Beyond has filed for bankruptcy, and our suppliers are well aware that they've filed for bankruptcy,” Johnson said, according to a call transcript.
“We operate in a large and fragmented marketplace,” Johnson said. “So, whenever there is white space created by any struggling competitor, we view it as an opportunity to capture market share. We viewed it that way in the third and fourth quarter.”
In its most recent earnings report for the first quarter, Overstock reported a net loss of $10 million, a gross profit of $90 million – 23.5% of revenue – and total net revenue of $381 million, down 29% year over year for the quarter ending March 31.
During that time frame, the company said it had 4.8 million active customers, down 35% from a year ago; an average order value of $220, down 1% from last year; and 1.7 million orders delivered, down 29% year over year. Overstock said orders placed on a mobile device were 51% of gross merchandise sales.
In preliminary Q4 results announced ahead of its bankruptcy filing, Bed Bath & Beyond reported net sales of about $1.2 billion, down from $2.1 billion the previous year. The company’s comp sales declined in the 40% to 50% range and the retailer reported continuing operating losses.
