Business

Buybuy Baby, a Bright Spot for Bed Bath & Beyond, Reports Steep Drop in Sales Against Tough Comparisons

Gabby Jones | Bloomberg | Getty Images
  • Buybuy Baby, a rare bright spot for Bed Bath & Beyond, posted a sharp sales decline in the most recent quarter as it faced tough comparisons versus a year earlier.
  • The baby gear chain was recently a target for acquisition and a key subject in an activist investor dispute.
  • The retailer said it has several growth initiatives underway, including the launch of its first private label, the debut of a new baby registry program and more store events.

Buybuy Baby has been a rare bright spot for struggling Bed Bath & Beyond.

On Thursday, however, the baby gear chain reported a steep quarterly sales drop — raising eyebrows and prompting concerns that it may also be losing customers.

Buybuy Baby's comparable sales declined by a high-teens percentage compared with a year ago in the three-month period ended Aug. 27. At Bed Bath & Beyond's namesake stores and website, comparable sales dropped by 28% year over year.

Retail sales got a lift last year from government stimulus, including from child tax credits. Interim CEO Sue Gove said Thursday that Buybuy Baby faced tough comparisons in the quarter because of that, but has maintained market share in the category.

Buybuy Baby has been one of its parent company's strongest businesses and most valuable assets. As Bed Bath & Beyond namesake stores have shuttered, the company has opened more Buybuy Baby locations. Its banner also caught the attention of activist investor Ryan Cohen, co-founder of Chewy and chair of GameStop, who pushed for a sale of the higher-performing banner. It reportedly drew interest from potential buyers, too.

Bed Bath, which agreed to explore strategic options for Buybuy Baby as part of a truce with Cohen, has said it is focused on driving sales and refreshing the business, including the baby registry. (Several other companies, including Walgreens and Kohl's, have also cited a chillier market for mergers and acquisitions, causing them to postpone or end potential deals.) Cohen has since sold his entire stake in Bed Bath.

Buybuy Baby Brand President Patty Wu told investors on Thursday's call that the banner plans to return to growth in the back half of the year. She spoke about ambitions to become the go-to place for parents during pregnancy and beyond, pointing to several initiatives underway.

She said Buybuy Baby will launch its first private-label brand in November, which will include apparel, furniture and decor for infants to toddlers at good value. It will carry popular holiday items, such as matching pajamas for families, and offer related resources on its website, such as tips about travel gear that makes for a smoother flight or road trip over the holidays.

Plus, she said, it will relaunch its baby registry in time for early next year and expand the number of store events.

"We're going to turn our stores into parenting hubs by bringing product and education together," she said.

Copyright CNBC
Contact Us