A customer carries a Buy Buy Baby shopping bag in New York, August. 25, 2022.
Gabe Jones | bloomberg | Getty Images
bed bath behind The bankruptcy-run auction for the Buy Buy Baby chain splits it into two phases as the retailer struggles to lock in bids in a sale now shrouded in suspicion.
An auction of all Buy Buy Baby assets was originally scheduled for 10 a.m. ET Wednesday. Now, bids will only be accepted for the chain’s intellectual property, including its brand and domain, according to people familiar with the matter.
The failed home goods retailer plans to host a separate auction, likely Thursday, where buyers can place bids to preserve Buy Buy Baby and its stores, said the people, who have not been allowed to speak publicly on the matter.
The initial winner will likely be chosen during the intellectual property auction on Wednesday. Bidder and other bidder can participate in the second auction. If Bed Bath & Beyond receives a higher bid for the entire banner than it gets for the intellectual property, the people said, that bidder can be picked and the winner in Wednesday’s auction eliminated.
The decision to split the bid comes after the retailer held separate sale actions for the Buy Buy Buy Baby and Bed Bath & Beyond banners.
Some people said the move, considered unusual in the world of bankruptcies, allows Bed Bath & Beyond to boost its bids for the Buy Buy Baby chain where skepticism about the bids, if any, is growing.
The sign, which sells baby goods such as strollers, clothes, and cribs, has long been considered the crown jewel of Bed Bath & Beyond’s assets. It attracted the interest of many bidders before and after its parent company was declared bankrupt. Some potential buyers have considered keeping stores open.
But as the auction approached, interest in keeping those stores alive waned, and the retailer had difficulty anchoring bids in an increasingly uncertain sale, some people said.
Buy Buy Baby retail store in New York, August. 25, 2022.
Gabe Jones | bloomberg | Getty Images
Bidders interested in Buy Buy Baby and its brick-and-mortar store operation and online presence will have to purchase the bulk of its 100-plus locations to reach profitability.
The expenses behind running stores such as rent, overhead costs, and salaries make it difficult to reach profitability if the buyer acquires only a fraction of the Buy Buy Baby doors with their intellectual property rights.
“There is no profitable model where you only have 10 stores or 40 stores,” a person familiar with the matter previously told CNBC.
Bed Bath & Beyond did not respond to CNBC’s request for comment.
Some people said that the credit offer from the former bankruptcy lender Sixth Street Partners, which can team up with an e-commerce platform, is a better contender. It is unclear if the offer will go beyond the intellectual property assets. Sixth Street Partners did not respond to CNBC’s request for comment.
Go Global Retail — which owns children’s clothing brand Janie and Jack — was initially interested in keeping its Buy Buy Baby stores open, but the number of locations it was interested in providing has since dwindled to about 20 stores, if any at all, CNBC previously reported.
Babylist made direct-to-consumer online registration an offer to acquire some of Buy Buy Baby’s assets, such as its domain name and brand, but opted out of bidding on its stores, CEO Natalie Gordon previously told CNBC.
Earlier this month, Overstock.com won the auction of Bed Bath & Beyond’s assets and bought Banner’s intellectual property and digital assets for $21.5 million. The digital retailer has not approved any Bed Bath & Beyond purchases.