Unfortunately, we may be losing another specialty chain. “buy buy BABY,” owned by “Bed Bath & Beyond,” announced Chapter 11 bankruptcy over the weekend. Their plans include closing 120 “buy buy BABY” stores.
This is unfortunate news for the toy industry. The name contains the word “BABY” but the chain sold plenty of toys aged 1 to 3 and 3 and up.
There is a chance, however, that “buy buy BABY” will attract a buyer. Why? Because “buy buy BABY” was a successful operation. Here is how Ryan Cohen sized up “buy buy BABY’s” value in a March 6, 2022 letter to the “Bed Bath & Beyond” Board of Directors:
Another path that can streamline Bed Bath’s
strategy and unlock value trapped within the Company’s underperforming shares is a sale or spin-off
of the BABY banner. Given that BABY is estimated to reach $1.5 billion in sales in Fiscal Year 2023
with a double-digit growth profile and at least 50% digital penetration, we believe it is likely much
more valuable than the Company’s entire market capitalization today.
I find it interesting that the demise of “Bed Bath & Beyond” is blamed by several commentators on e-commerce. Surely e-commerce didn’t help its fortunes, but based on my analysis, the more significant factors were a business model that no longer worked and a series of bad business decisions.
Whether it was the five-and-dime stores of the mid-20th century (F.W. Woolworth and M.H. Fishman), the catalog showrooms of the 70s and 80s (Best Buy and Service Merchandise), or the specialty retailers of the 21st century (Circuit City and now “Bed Bath & Beyond), retailing concepts come in waves. They rise, dominate, and then subside into the oblivion of a nostalgic brand name.
The retail tides are therefore running against a specialty brand like “buy buy BABY.” We can, however, still hope, so let’s hope that ‘buy buy BABY” continues its run and ends up in the hands of an owner who knows what to do with it. If not, it will become nothing more than a future piece of nostalgia for some ten-year-old in their adult years.
