Bed Bath & Beyond To Sell $250M Non-Core Assets, Shares up 5%


Shares of Bed Bath & Beyond are rising 5.4% in pre-market trading today as the company announced agreements to sell its Christmas Tree Shops retail brand, its institutional Linen Holdings business, and a distribution center in Florence, New Jersey for a total of $250 million. The home goods retailer has been selling its non-core assets to optimize its portfolio and increase its financial strength.

Bed Bath & Beyond (BBBY) has entered into an agreement with Handil Holdings, LLC. to sell its 80 Christmas Tree Shops and a Middleborough, Massachusetts distribution center. The transaction is expected to close in November.

The company has also entered into a deal with The Linen Group, LLC, an affiliate of Lion Equity Partners, to sell its Linen Holdings business, which offers linen, terry, amenities, case goods and apparel to companies in the global hospitality and healthcare industries. Additionally, BBBY is selling its distribution center in Florence, New Jersey to an institutional buyer. Both these transactions are expected to close this month.

BBBY’s President and CEO Mark Tritton commented, “Today’s announcement builds on the purposeful steps we have made throughout the year to simplify our portfolio, unlock capital and create clear strategic focus to accelerate our plans to build our authority in the Home, Baby, Beauty and Wellness markets.”

“Customers are responding well to the introduction of our new omni-always services, and we will continue to invest in our digital-first experience with a customer-inspired assortment that makes it easy to feel at home with Bed Bath & Beyond.”

Earlier this month, BBBY reported better-than-expected fiscal 2Q results driven by strong demand for home merchandise amid the pandemic.

Following the recent results, Goldman Sachs analyst Kate McShane raised her price target for BBBY stock to $17 from $8 but maintained a Sell rating. The analyst stated, “While in our view, BBBY is benefitting from a ‘golden era’ of home goods demand, we are also beginning to see clear evidence of an improving business following a decade of mismanagement, underinvestment and reluctance to skate where the puck was going (i.e. Omni).”

However, given the year-to-date rise in the shares, the analyst said that she is “reluctant to chase today.” Also, the analyst feels that near-terms trends could be short-lived. (See BBBY stock analysis on TipRanks)

The Street is sidelined on the stock with a Hold consensus based on 4 Buys, 4 Holds, and 2 Sells. With shares advancing 28% year-to-date, the average analyst price target of $19.88 indicates a potential downside of about 10.2% ahead.

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