Bed Bath & Beyond Stock Rises After Selling Half Its Real Estate

Bed Bath & Beyond sold a sizable amount of its real estate to fund company turnaround efforts.

Mark Tritton has been CEO of Bed Bath & Beyond for two months, but he’s already made big changes. In December, Tritton got rid of six senior-level executives, stating that he has a new vision in mind for the company.

And this week, the Wall Street Journal reported that Bad Bath & Beyond signed a deal to sell half of its real estate to a private equity firm. The private equity firm will then lease the space back to the company.

Why the company sold its real estate

This latest turn of events is a big shift for Bed Bath & Beyond. The former company leadership was opposed to the idea of selling off its real estate. 

The company is selling its real estate to a private equity firm in a deal that covers over two million square feet of space. This includes the company’s executive offices, its distribution center, and many of its retail locations. 

The real estate transaction will generate more than $250 million for Bed Bath & Beyond. Management plans to use this money to repay debt and fund the company’s new turnaround efforts. 

By leasing the property instead of owning it outright, the company can save money and free up some cash flow for the business. 

What we can expect from Bed Bath & Beyond

$250 million is a lot of money, but it’s not going to be enough to fix the problems Bed Bath & Beyond faces. Bed Bath & Beyond is scheduled to release its third-quarter earnings report on Jan. 8, and it’s not expected to be a good one. 

The company has an excessive amount of inventory it still needs to clear out, and it still carries a heavy debt load. Not to mention, Bed Bath & Beyond still needs to deal with falling sales and traffic at its retail stores. 
Investors will be waiting to hear comments from CEO Mark Tritton to get a sense of what’s to come from Bed Bath & Beyond. The company is currently considered a moderate buy on Wall Street.