Buy Buy Baby suitors lose interest in keeping stores open

Buy Buy Baby, the baby goods retailer owned by Bed Bath & Beyond, has been attracting interest ahead of its bankruptcy-run auction. But suitors are cooling on keeping its stores open.

Earlier this week, Bed Bath & Beyond said in court papers there would be a bankruptcy-run auction Wednesday for Buy Buy Baby’s assets. Bed Bath had its own auction this week, with Overstock.com agreeing to buy for the brand’s intellectual property and digital assets.

Divvying up the company’s banners into two auctions came as interested buyers continue to weigh offers for Buy Buy Baby, some that included keeping stores open, according to people familiar with the matter, who were not authorized to speak publicly due to the private nature of the negotiations.

But as the auction nears, interest in keeping Buy Buy Baby’s stores open has waned.

In particular, the expenses behind running the stores – leases, overhead costs, salaries – make it difficult to reach profitability if Buy Buy Baby’s stores were acquired along with its intellectual property, one of the people said. “There’s not a profitable model where you only have 10 stores or 40 stores,” the person said.

Buy Buy Baby had approximately 120 stores, according to court papers.

Direct-to-consumer online registry Babylist has submitted a bid to acquire some of Buy Buy Baby’s assets, like its domain name and trademark, CEO Natalie Gordon told CNBC.

“When we looked at the stores and the Buy Buy Baby store footprint, we really said like, does this accelerate this strategy? … And the answer was actually no,” said Gordon. Babylist had earlier told CNBC it had $290 million in 2022 revenue and is profitable.

Gordon added that the size of the overall footprint, the stores themselves and how the stores work wouldn’t take Babylist in the direction it wanted to go.

Meanwhile, investment firm Go Global Retail has been weighing a bid, the people said. In addition, pre-bankruptcy lender Sixth Street Partners is considering an offer, and could team up with an e-commerce platform to credit bid on Buy Buy Baby, the people said.

Initially, Go Global Retail – which owns the children’s wear brand Janie and Jack – was interested in keeping Buy Buy Baby stores open, the people said. That number has since dwindled down to about 20 stores, if any at all, they added. The Wall Street Journal earlier reported Go Global Retail’s interest.

The potential credit bid from Sixth Street and the e-commerce platform, whose identity remains unclear, would likely just be for Buy Buy Baby’s intellectual property, the people said. An attorney for Sixth Street reportedly said in court the lender was considering a credit bid for some or all of Bed Bath & Beyond’s assets if no others emerged.

Go Global Retail declined to comment. Representatives for Bed Bath & Beyond and Sixth Street didn’t immediately respond to comment.