Bed Bath & Beyond has entered into an agreement to acquire The Brand House Collective, formerly Kirkland’s, in a deal valued at approximately $26.8 million.
The merger brings together Bed Bath & Beyond’s home brands and digital reach with The Brand House Collective’s merchant-led model and store-conversion discipline.
Amy Sullivan, CEO of The Brand House Collective, will become CEO of the newly organized division, Beyond Retail Group, overseeing all omni-channel retail operations across the Bed Bath & Beyond, Buybuy Baby, Overstock and Kirkland’s Home brands.
The combined company expects to unlock at least $20 million in cost savings, driven by the elimination of duplicate functions. This will allow it to reinvest in growth initiatives, including high-conversion store formats and digital and omni-channel enhancements.
In addition, more than 40 underperforming or non-strategic stores will close early next year to support bottom-line improvement. There are currently more than 300 stores across 35 states.
“This acquisition is a big step in building a profitable, growth-oriented ‘Everything Home’ company,” said Marcus Lemonis, executive chairman of Bed Bath & Beyond. “The power of this deal comes from a more efficient and productive engagement with the consumer.”
Sullivan added: “Our combined entity strengthens our financial position and reaffirms our mandate to grow revenue and profit at the pace the market expects.”
Under the terms of the agreement, The Brand House Collective shareholders will receive 0.1993 shares of Bed Bath & Beyond common stock. The ratio reflects each company’s volume-weighted average price over the thirty trading days prior to November 20.
Bed Bath & Beyond has advanced $10 million under an existing delayed draw term loan facility with The Brand House Collective to fund store conversions and other initiatives.
The transaction is expected to close in the first quarter of next year.
Bed Bath & Beyond recently reported a 93 per cent improvement in its net loss for the third quarter, despite a 17.4 per cent decline in revenue. Meanwhile, The Brand House Collective saw a 12 per cent sales drop in the second quarter.
