Not all of us even knew that Personalization Mall belonged to Bed Bath & Beyond (BB&B), but it won’t for long now. I was agreed that personalized gift retailer will be sold to 1-800-Flowers for $252 million. This transaction is just a part of a long-term strategy of BB&B, which is navigating the changing shopping climate and retail environment. Ever since 2012, BB&B has been losing the edge and struggling to capture market share.
1-800-Flowers are definitely excited to incorporate Personalization Mall into their platform and expand their gift offering capabilities online.
The sale includes Personalization Mall’s website, assets, and their huge warehouse in Illinois. The most recent recorded revenues were $150 million per year, which are not a bad addition to 1-800-Flowers basket of brands.
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Meanwhile BB&B is fighting for its survival. The reported sales dropped by 5.4% in the last quarter of fiscal year. This low number reflects decreased traffic to physical stores, inventory problems, various sales, and heightened advertising efforts. It’s scary to think what store lockdowns and stopped shopping due to corona virus will do to this company and to many others.
BB&B is seeking to slim down and renew its original focus on home furnishings and décor. The company is doing many right things, but booming online retailers and big box stores are hard to compete with. BB&B has recently hired Mark Tritton from Target as a new CEO to help company gain some footing back.
Rebranding and renewing is still a long road for Bed Bath & Beyond. Last holiday season was weak and shares fell significantly. There are experts who think that the company might be too far gone for renaissance, but only time will tell. Coronavirus pandemic is going to erode the market share even further, but it can also serve as a chance to completely reorganize. We all will have to change and adapt to new retail climate and so will retailers. Only the strongest will survive.
Selling Personalization Mall will give temporary relief and provide much needed cash flow for new strategies and business model simplification, where the company will get back to its roots of home décor, baby products, and beauty.
Before corona outbreak BB&B had plans to distribute $1 billion as return capital to its shareholders, pay off some debt, and invest in operations. How those plans will change remains to be seen, but before the pandemic the company was confident in its monetary standing. The sale of Personalization Mall was going to strengthen that even more. Now it might just help pull the company out of the abyss.
The new CEO has been busy restructuring the leadership and management ranks to make sure low holidays sales won’t happen again. This might not be enough though, but Bed Bath & Beyond still has loyal customers, plenty of assets, and Buy Buy Baby branch, which is surging ever since Toys’R’Us went bankrupt.