Bed Bath & Beyond (OTCMKTS:BBBYQ) stock closed down nearly 13% today on news that the retailer will host two separate auctions for its Buy Buy Baby chain.
Specifically, Bed Bath and Beyond is opting to separate Buy Buy Baby’s brand from its physical infant supply store chain.
Bed Bath had originally scheduled an auction for all of Buy Buy Baby’s assets at 10 a.m. Eastern Wednesday. It seems the company launched the auction only accepting bids for the chain’s intellectual property, according to anonymous sources cited by CNBC.
Some are speculating Bed Bath is planning to hold an entirely separate auction where interested buyers can submit bids for the right to continue the operation of Buy Buy Baby stores, which remain open due to high costs.
Depending on the results of the two auctions, should Bed Bath receive a higher bid for the physical assets compared to the bid received for the Buy Buy Baby IP, Bed Bath may opt to give the second bidder full rights to the brand, superseding the winner of Wednesday’s auction.
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Even by Wall Street standards, Bed Bath’s split-form auction is a strange move for a bankrupted company. To separate the IP from the entire franchise in the case of Buy Buy Baby only adds to the bizarre nature of Bed Bath and Beyond’s bow-out.
That said, concerns remain that Bed Bath won’t receive any bids to maintain its Buy Buy Baby stores. Between its brick-and-mortar locations and its online store, potential bidders would need to purchase most of its more than 100-plus retail locations for a shot at profitability, due to the nature of the company’s fixed costs.
As it stands, pre-bankruptcy lender Sixth Street Partners is considered a front runner to enter into the Buy Buy Baby business. However, it’s unclear whether it will only place a bid for the IP, or the entire operation.
If you recall, Overstock.com (NASDAQ:OSTK) was recently crowned winner of Bed Bath and Beyond’s auction for its namesake assets. The online retailer did not, however, purchase any of Bed Bath’s physical stores.
BBBYQ stock is currently trending around just 30 cents, trading on the over-the-counter markets.
It’s unclear what’s next for the once-upon-a-time retail giant.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
