Back to the Future?
It's been a while since we've seen a company in the retail space like the one that Bed Bath and Beyond is evolving into - a multi-nameplate retailer that operates in a diverse array of product sectors.
You have to go back to the late 1980s and early 1990s to find something similar, and even then the examples are ... limited.
Until it began spinning off properties in the early '90s, Melville Corp. operated drugstore chains (what remains of the company is now CVS), apparel chains (among them, Marshalls, which it sold to TJX), footwear stores (including Thom McAn), toy stores, furniture stores and a little something called Linens 'n Things.
On a smaller scale, Kmart Corp. owned The Sports Authority, Builders Square and Waldenbooks until the mid-1990s.
It seems more likely that Bed Bath will operate Cost Plus as a separate chain than absorb it. Heck, there are nearly 1,000 Bed Bath & Beyond stores in operation already.
The roughly $964 million in annual sales generated by Cost Plus last year is just about one-tenth of the $9.5 million Bed Bath & Beyond's nameplates collectively produced in the most recent fiscal year. But compared to its other acquisitions - the Harmon discount drugstore chain, buy buy Baby and The Christmas Tree Shop - this is a major pick-up.
The other properties were small and highly regional when BBB purchased them. Cost Plus operates 258 stores in 30 states.
But this move adds nearly $1 billion in revenues to the kitty in one fell swoop. It also drops another $36 million or so onto Bed Bath's profit line ($989.5 million last year).
I think, most importantly, it gives Bed Bath some exposure in a category that's become a traffic-driving linchpin in other retail channels: consumables. Now, I doubt the retailer wants to sell Kraft cheese slices or Frosted Mini-Wheats. But Cost Plus does 29% of its business in "better" branded but value-priced spices, sauces, coffee, pasta and, in some markets, wine.
Just as the Harmon acquisition opened the door to an edited health and beauty assortment in Bed Bath stores, I suspect we'll see a more sophisticated offering of consumables than now dot the chain.
It's going to be fun to watch.