Bed Bath & Beyond Sells Cost Plus World As Part of Streamlining Efforts

Bed Bath & Beyond has entered into an agreement to sell its Cost Plus World Market business to Los Angeles-based private equity firm Kingswood Capital Management.

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The sale of Cost Plus includes 243 brick-and-mortar locations, Cost Plus’ digital business, two distribution facilities and a corporate office located in Alameda, California. Bed Bath & Beyond (BBBY) expects the transaction to close before the end of its fiscal year in February 2021.

CEO Mark Tritton stated, “We’ve taken deliberate steps throughout the year to streamline our portfolio and fortify our strategic focus in Home, Baby and Beauty & Wellness, and today’s announcement represents the conclusion of this work. In all, we have unlocked significant value from the divestiture of 5 business concepts this year, and we have also meaningfully reduced our lease liability and overall debt. These actions provide greater financial flexibility to support our digital first, omni-always transformation and our commitment to deliver sustainable total shareholder return.”

Meanwhile, the company also announced that it has expanded its share repurchase program from up to $675 million to up to $825 million over the next three years by approving a new accelerated share repurchase (ASR) program of $150 million. The new ASR program will be in addition to the $225 million ASR program announced in October 2020. The company expects to complete both ASR programs by no later than the fiscal year ending Feb. 27, 2021. (See BBBY stock analysis on TipRanks)

BBBY shares have risen 9.1% year-to-date and the average price target of $22.89 indicates an upside potential of 21.3% over the coming year. The stock scores the Street’s Moderate Buy analyst consensus based on 5 Buys, 4 Holds and 2 Sells.

Back in October, Robert W. Baird analyst Peter Benedict reiterated a Buy rating on BBBY with a price target of $30. Benedict said that the pullback in the stock presents a good buying opportunity as a recent investor meeting increased his confidence in the company’s prospects. He believes that the company has a strong foundation to build upon and the new team is moving fast to enact real change across the organization.