E-commerce furniture retailer Overstock.com (NASDAQ:OSTK) completed the $21.5 million acquisition of beleaguered retailer Bed Bath & Beyond’s (BBBYQ) intellectual property (IP) and digital assets yesterday. Overstock shares gained 6.1% on the news and surged another 6.3% in after-hours trading on June 28. After the takeover, which was supervised by the Bankruptcy Court, OSTK will commence the sale of kitchen, bedding, and bath-related products. Overstock hopes to boost its sales through the expanded product offerings and customer loyalty of Bed Bath & Beyond’s brand.
Overstock will Change the Website Name
The unparalleled popularity of the BBBYQ brand name is no secret, and OSTK is leveraging this fact by changing its website domain to Bed Bath & Beyond. Next week, The retailer will first change the domain in Canada, followed by an overall name change in the U.S. in the weeks ahead. Overstock will also launch a mobile app and loyalty program under the new Bed Bath & Beyond brand in the U.S. Overstock’s Club O loyalty program will be rebranded as Welcome Rewards, which will offer 5% redeemable reward dollars on all purchases.
Overstock is not acquiring any of BBBYQ’s physical stores or assets, nor the buybuy Baby or Harmon banners. The company even gave a peek into its preliminary second quarter Fiscal 2023 results. Sales are expected to show a fall in the low 20% range compared to the prior year period. Having said that, OSTK could report positive adjusted EBITDA for the to-be-reported quarter. The company will give further details about the deal in a conference call scheduled for 8:30 a.m., EST today.
Excited for the company’s future, Overstock.com CEO Jonathan Johnson said, “The combination of our winning asset-light business model and the high awareness and loyalty of the Bed Bath & Beyond brand will improve the customer experience and position the Company for accelerated market share growth.”
What is the Forecast for OSTK?
Wall Street has a cautiously optimistic view of OSTK. The stock has a Moderate Buy consensus rating based on two Buys and three Hold ratings. On TipRanks, the average Overstock price target of $36.30 implies 42.1% upside potential from current levels. Meanwhile, OSTK stock has gained 35.3% so far this year.
