Bed Bath & Beyond, the iconic home goods retailer that was once relegated to the annals of retail history after its bankruptcy filing and the closure of its physical stores, is making an unexpected comeback. Forget massive stores for now, though, because this return comes with a twist – the dearly missed retailer is opening small neighborhood stores in partnership with Kirkland’s.
Kirkland’s Home and Bed Bath & Beyond Forge Strategic Partnership for New Stores
On Monday, Kirkland’s Home and Bed Bath & Beyond Inc. announced a strategic partnership that will see the pilot opening of up to five small-format Bed Bath & Beyond stores in local neighborhoods. These new stores will range from 7,000 to 15,000 square feet. As part of this agreement, Kirkland’s will operate these stores exclusively, with a possibility of opening Bed Bath & Beyond shop-in-shops within existing Kirkland’s locations in the future.
“Having known the iconic Bed Bath & Beyond brand for years, we are thrilled to partner with Marcus and the entire Beyond team to bring the brick-and-mortar strategy back to life,” Kirkland’s CEO Amy Sullivan said in a press release.
The new stores will offer a carefully selected assortment of products from well-known and long-standing suppliers. Kirkland’s will also leverage its experience in store operations and its existing physical locations to explore opportunities for converting existing stores or expanding into new markets.
“An omnichannel approach to Bed Bath & Beyond is quintessential to its success,” Marcus Lemonis, executive chairman of Beyond, said in a statement. “We understand that retail is both an art and a science and have vetted the management team and infrastructure of Kirkland’s Home as an ideal organization to help bring the iconic Bed Bath & Beyond brand back.”
To support this initiative, Bed Bath & Beyond is providing $17 million in debt financing to Kirkland’s. Of this amount, $8.5 million will take the form of a convertible note, which can be converted into Kirkland’s common stock at a rate of $1.85 per share, contingent upon stockholder approval. Furthermore, Bed Bath & Beyond will purchase $8 million in Kirkland’s stock through a subscription agreement.
The two companies have also committed to a seven-year collaboration agreement. Beginning in the first quarter of 2025, Bed Bath & Beyond will receive a collaboration fee of 0.25% based on Kirkland’s total retail and e-commerce revenue. Additionally, an incentive fee of 1.5% will be awarded on any incremental growth in Kirkland’s e-commerce revenue. Finally, under a trademark licensing agreement, Bed Bath & Beyond will earn a royalty fee of 3% on net store sales generated under its brand.
Bed Bath & Beyond’s Journey Post-Bankruptcy: A New Era for Retail
After facing years of financial struggles and merchandising challenges, Bed Bath & Beyond vanished from the retail scene following its bankruptcy in April 2023. The company, now known as Beyond Inc., purchased Bed Bath & Beyond’s intellectual property—including social media accounts, mobile platforms, business data, and trademarks—for $21.5 million in June. This acquisition allowed Beyond to relaunch Bed Bath & Beyond as an online-only operation.
Kirkland’s also has had its fair share of challenges. According to Retail Dive, the company reported net sales of $86.3 million for its second quarter, reflecting a 3.6% decline compared to the previous year. Overall comparable sales dropped by 1.7%, leading to an operating loss of $13.3 million. Although Kirkland’s net loss decreased to $14.5 million from $19.4 million in the same quarter last year, it still faced challenges. As of August 3rd, Kirkland’s operated 325 stores across 35 states.
However, the new partnership between Bed Bath & Beyond and Kirkland’s presents opportunities for growth. Both companies plan to collaborate on merchandising, product development, and sourcing, aiming to expand their product offerings—including furniture, rugs, textiles, and décor—across a larger store network and Beyond’s websites and other marketplaces.
Additionally, they will leverage an improved supply chain network to lower costs, enhance inventory management, and drive revenue growth. Kirkland’s will also engage with Beyond’s consumer data collective, loyalty program, and financial services, all aimed at increasing customer traffic and revenue while reducing costs associated with customer acquisition, conversion, and retention.