Bed Bath & Beyond Tidies Up Its Portfolio Going Into the Holidays

Retail

Published: October 14, 2020 12:13 pm

Bed Bath & Beyond Inc. (NASDAQ: BBBY) has announced that it will sell off some of its noncore assets. The cash gained from these deals is not all that benefits the company. It also will be streamlining, or slimming down, its portfolio with these sales. The news gave shares a nice boost on Wednesday.

The company has entered into separate agreements to sell its Christmas Tree Shops retail banner, its institutional Linen Holdings business and a distribution center located in Florence, New Jersey.

These transactions are expected to generate roughly $250 million in aggregate. Again, Bed Bath & Beyond is looking to optimize its portfolio through these asset sales. The specialty retailer may be looking to pursue more of these transactions in the future to further bolster its financial strength and enhance shareholder value.

For the Christmas Tree Shops, the company is selling off all 80 of its brick-and-mortar locations and a distribution center to Handil Holdings. The companies have agreed to a transition service agreement, following the close of the transaction, to help ensure business continuity, particularly during the upcoming holiday season. This deal is expected to close in November of this year.

Bed Bath & Beyond is selling its Linen Holdings business to the Linen Group, an affiliate of Lion Equity Partners. Linen Holdings will merge with Riegel Linen, an existing Lion Equity portfolio company. This deal is expected to close this month.

And the company has agreed to sell its distribution center in Florence, New Jersey, to an institutional buyer. That sale is expected to close this month as well.

As of the most recent quarter, the company had $1.44 billion in cash and cash equivalents on the books. Bed Bath & Beyond has a market cap of $2.97 billion.

Excluding Wednesday’s move, the stock had outperformed the broad markets, with a gain of about 28% year to date. In the past 52 weeks, the share price was up closer to 80%.

Bed Bath & Beyond stock traded up about 6% to $23.48 on Tuesday, in a 52-week range of $3.43 to $24.19. The consensus price target is $20.00.

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