Bed Bath & Beyond has canceled its auction for the Buy Buy Baby chain after failing to find a buyer willing to keep the stores operating. Although the auction was unsuccessful, there are still parties interested in the assets of the baby retailer. Bidders withdrew from the auction when they realized that the chain’s value had declined significantly. However, there is a possibility that Bed Bath & Beyond could accept a bid for Buy Buy Baby in the coming week. The chain’s fate will be determined in a court hearing scheduled for Tuesday, where the sale of Buy Buy Baby’s intellectual property to Dream on Me Industries will be approved. Dream on Me Industries, a retailer based in New Jersey and a former supplier of Buy Buy Baby, has agreed to purchase the trademark and digital assets for $15.5 million if no higher bids emerge.
Decline of a Once-Promising Retailer
Buy Buy Baby, which was once considered the crown jewel of Bed Bath & Beyond’s empire, has been conducting liquidation sales at its 120 stores since its parent company filed for bankruptcy protection in April. As the auction process dragged on and the chain’s inventory dwindled, its value also decreased. After almost three months of closeout sales, there is little left to bid on other than the brand’s intellectual property. The majority of the remaining value lies in the intellectual property, especially at this stage of the process. When the stores were fully operational three months ago, it may have been a different story.
Bed Bath & Beyond has repeatedly postponed and divided the bankruptcy-run auction process for Buy Buy Baby in an attempt to attract higher bids and find a buyer willing to maintain the stores. Initially, an auction was scheduled solely for Buy Buy Baby’s intellectual property, which Dream on Me won. A separate auction was then planned for Friday, where potential buyers could bid on the chain as an ongoing business. The bid from Dream on Me could have been surpassed if a higher sale price was offered. However, the auction was canceled when no such bids materialized.
Go Global Retail, a brand investment firm represented by Ankura Capital Advisors, had shown interest in keeping 75% of Buy Buy Baby’s stores operational. The firm had previously sought an additional $50 million in capital to strengthen its bid. It is already involved in the baby business and currently owns children’s apparel company Janie and Jack. However, Go Global Retail declined to comment on the matter.
If the auction had proceeded, it is unlikely that bids would have significantly exceeded the $15.5 million offered by Dream on Me for the intellectual property. The only remaining assets were employees, empty stores, leases, and whatever inventory remained. Any firm that takes over Buy Buy Baby will likely need to temporarily close the stores for restocking and to reestablish operations.
In a previous auction, Overstock.com successfully acquired Bed Bath & Beyond’s intellectual property and digital assets for $21.5 million. As a result, Overstock.com decided to rebrand its website to Bedbathandbeyond.com.
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