Decoding the Beyond Inc./Kirkland’s deal: Key roles and responsibilities
There are a lot of moving parts in Beyond Inc.’s new partnership with Kirkland’s – including who will have the say-so in creating the new Bed Bath & Beyond format.
Midvale, Utah and Nashville, Tenn. — There are a lot of moving parts in Beyond Inc.’s new partnership with Kirkland’s – including who will have the say-so in creating the new Bed Bath & Beyond format.
“We’re still working through the details of that – and Kirkland’s’ certainly will be in the driver’s seat on those decisions,” said Kirkland’s Inc. CEO Amy Sullivan.
“Those will be stores that we assort, that we buy the inventory for and that we operate,” said told investors during a brief call this morning shortly after the $25 million deal with Beyond Inc. was announced.
Here’s a quick run-down of what each partner in the collaboration expects from the other.
Will all Kirkland’s stores be converted to the new Bed Bath & Beyond format?
No. Kirkland’s, which currently operates 325 stores in 35 states, intends to expand its own footprint while it establishes a brick & mortar base for the Bed Bath & Beyond nameplate.
As a first step, Kirkland’s will evaluate legacy Bed Bath & Beyond markets as well as markets where Kirkland’s has shuttered stores over the past few years.
“I see this as an opportunity to consider multiple brands based on the historic demographics and the market for each,” said Sullivan. “We’ll start to build a real estate strategy that will allow us to grow at a rapid rate across both of the brands.”
In 2025, Kirkland’s will open “up to five” Bed Bath & Beyond stores in the 7,000- to 15,000-square-foot range. The BBB stores will comprise converted Kirkland’s locations and could eventually include new Bed Bath & Beyond locations.
How will the Bed Bath & Beyond stores be merchandised?
The curated Bed Bath & Beyond neighborhood stores will include merchandise from some of BBB’s legacy vendors – including national brands – with a focus on the nameplate’s core product areas. It may also include some Kirkland’s home décor such as a seasonal shop or gift shop, Sullivan said.
Each location “would inherently be a Bed Bath & Beyond store [with] the best of the categories in a smaller space,” she explained. “Our belief in partnering with [Beyond Inc. executive chairman Marcus Lemonis] and the Beyond team is that the Bed Bath & Beyond revitalization will the best if it is that legacy experience that the customer expects.”
Will there be any cross-merchandising?
Sort of, but mostly online. A banner promoting Kirkland’s went live on the bedbathandbeyond.com site this morning. “Delighted to introduce Kirkland’s Home as a member of the Beyond family,” it reads, along with a link to Kirkland’s site.
Kirkland’s will also begin distributing its products on the Bed Bath & Beyond site and will use Beyond Inc.’s Overstock.com platform to more efficiently exit out of slower turning inventory.
In addition, there is a non-exclusive license in the deal for shop-in-shops under the Bed, Bath & Beyond nameplate at yet-to-be-determined Kirkland’s locations.
How does the Beyond Inc. deal help Kirkland’s?
First of all, financially. Beyond Inc. is investing $25 million in a combined debt and equity transaction to bolster Kirkland’s capital position.
“We expect the overall term arrangements with Beyond, including the fee structure, to be largely neutral from a P&L perspective compared to that of our previous debt capital structure while providing us significant growth opportunities,” said Sullivan.
The deal also gives Kirkland’s access to Beyond Inc.’s customer file at a time when it has been working to rebuild its own base. “Starting today, almost 40 million more customers will see the Kirkland’s brand as we launch across all of our combined platforms,” said Sullivan.
On the digital end of the business, Kirkland’s is in the process of re-platforming its e-commerce site and will now work with Beyond Inc.’s technology team.
“We see a tremendous amount of opportunity in front of us, which we expect will benefit both Kirkland’s and Beyond,” she said.
Beyond Inc.’s leadership will weigh in on how the new Kirkland’s deal and its recent $40 million investment in The Container Store fit into its broader strategy later this week. The company will live-cast the Beyond Inc. 2024 Investor Event on Oct. 24, 2024 at 11 a.m. ET.
After the stock market closes that afternoon, Beyond Inc. will release its third quarter financial results.
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