Bed Bath & Beyond was supposed to go away. It went bankrupt because of poor management and a lack of cash. Its employees were fired, along with management. Its stores were shut down, which hurt some property owners. However, Overstock.com Inc. (NASDAQ: OSTK) bought Bed Bath & Beyond’s domains and website, among other things, for a tiny $21.5 million. Wall Street loved the deal and sent the price of Overstock.com higher. One reason is that Overstock.com will use Bed Bath & Beyond as the new name for its online presence. (These companies have the worst reputations.)
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The deal shows that brands can live on after the businesses that own them go away. The same happened with RadioShack and, for a while, book retailer Borders. This also happened briefly for Blockbuster.
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Another advantage Overstock.com has is that it will operate Bed Bath & Beyond without the encumbrance of people, store rent or a large investment in marketing. It also gives up on bumbling management.
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Bed Bath & Beyond built its brand for 52 years. In 2011, it had over 1,100 locations, making it a nationwide company. Its revenue topped $10 billion.
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Overstock.com can sell thousands of products under the Bed Bath & Beyond brand. In many quarters, Bed Bath & Beyond’s brand is better known than Overstock.com’s, which makes the move a real coup.
Overstock.com’s stock should have risen when it bought Bed Bath & Beyond’s assets. It got a brand that was half a century in the making and was still very well known among consumers.
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