News Brief: Bed, Bath & Beyond to Buy Cost Plus

Today Bed, Bath & Beyond (BBB) announced jointly with Cost Plus that BBB will acquire the latter company in an all-cash transaction for outstanding shares followed by a merger. The deal is slated for completion at the end of June.

Cost Plus makes an attractive proposition for a company interested in expanding its online presence:

Cost Plus is making plans to generate annual web sales of about $100 million by 2017. “We have the ability to increase our e-commerce business to $100-plus million during the next three to five years,” Feld told Wall Street analysts on the company’s recent year-end earnings call. “Our e-commerce model is profitable.”

For the year ended Jan. 28, Cost Plus reported:

  • An increase in e-commerce revenue of about 53.8% to $26 million from $16.9 million in 2010.
  • Total sales of $963.8 million, up about 5.2% from total sales of $916.6 million.
  • Net income increased year over year about 469% to $16.5 million from $2.9 million in 2010.
  • The retailer didn’t disclose a figure for comparable-store sales.

The web accounted for 2.7% of total sales, compared with 1.8% in 2010.

This move also comes on the heels of previous collaboration between the two companies:

“Our successful merchandising and product collaborations over the last two years have demonstrated that our organizations work well together and that we can make key contributions to the continued success of the combined company,” says Cost Plus CEO Barry Feld.

With the acquisition it will be interesting to see whether Cost Plus will continue as a brand or be absorbed by BBB. Since both companies currently have live affiliate programs the latter move would have consequences for their channel partners.

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