Sometimes after companies fall, small parts of them are able to emerge from the ashes. This year, investors could only stand back as Bed Bath & Beyond filed for Chapter 11 bankruptcy, delisted from the Nasdaq and ultimately started closing down stores across the country. Through it all, the meme stock trended downward, falling well below the $1 mark. However, while this once-prominent retail chain has collapsed, one of its subsidiaries is attempting to rise again. Indeed, Buybuy Baby has reopened 11 stores in the U.S. — and it has plans to continue expanding in the coming year.
For retail investors, this may be taken as a sign of hope. After all, some members of the r/WallStreetBets crowd refused to sell their shares of Bed Bath, even after the company announced that they would get nothing from the liquidation. But this development isn’t a reflection on the bankrupt former retailer.
Buybuy Baby Gets a Second Chance
It makes sense that Buybuy Baby would be getting a second chance in a post-Bed Bath & Beyond world. The baby product chain caters to a more specific consumer market than its former parent, which failed to adapt for the digital age. However, that probably won’t impact Buybuy Baby too much. Consumers who are shopping for cribs, strollers and other baby products will likely want to do so in person. For that reason, Buybuy Baby can likely function well on a brick-and-mortar basis.
Even before Bed Bath & Beyond closed up shop, speculation rose that prominent investor Ryan Cohen planned on spinning off Buybuy Baby into its own independent company. That move would have made some sense, as being under the umbrella of a bankrupt parent didn’t do the chain any favors. Now, though, the company is gearing up to prove that it can survive the demise of it’s former owner. As The Wall Street Journal reports:
“The store reopenings offer further evidence that retailers view bricks-and-mortar locations as critical for bringing in customers and boosting sales. After an extended period of store closings, the sector is growing again. Retailers are on track to open more than 1,000 net new stores in the U.S. this year, according to advisory and research firm Coresight Research.”
Meanwhile, shares of Beyond (NYSE:BYON) — the company born of Overstock.com’s acquisition of Bed Bath & Beyond — are rising steadily today. Still, while the rebirth of Buybuy Baby is creating some positive momentum, there’s something important for investors to note. Buybuy Baby may be returning, but former meme stock Bed Bath & Beyond isn’t coming back.
On the date of publication, Samuel O’Brient 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.
