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Bed Bath & Beyond to buy Cost Plus for $495 million

May 09, 2012|By Tiffany Hsu
  • Daniel Gordon, then 18, shops for his freshman year using a scanner at Bed Bath and Beyond in Los Angeles in 2010. The company is buying Cost Plus for $495 million.
Daniel Gordon, then 18, shops for his freshman year using a scanner at Bed… (Francine Orr / Los Angeles…)

Home goods retailer Bed Bath & Beyond Inc. may be adding some international flair to its comforters and kitchen sets with a planned $495-million acquisition of Cost Plus Inc. and the Oakland company’s World Market and Imports chains.

Bed Bath & Beyond, based in Union, N.J., said Wednesday that it had entered a definitive agreement to buy Cost Plus for $22 a share in cash -- a 22% premium above its $17.99 closing price on Tuesday.

The deal will give Bed Bath & Beyond nearly 260 Cost Plus stores, which specialize in international knick-knacks, furniture, wine and food.

The boards of both companies unanimously approved the acquisition, which is expected to close during Bed Bath & Beyond’s fiscal second quarter.

Bed Bath & Beyond reported a profit of $351 million, or $1.48 share, for its fiscal fourth quarter, ended Feb. 25, a 23.8% increase from a year earlier. Revenue for the period was $2.7 billion, a 9.1% increase. Earnings for the full year rose 25% to $989.5 million, or $4.06 a share, on revenue of $9.5 billion, an 8.5% increase.

The company currently has 1,173 stores, including 993 Bed Bath & Beyond locations across North America as well as other brick and mortar names such as Christmas Tree Shops, Harmon and Buybuy Baby.

Cost Plus posted a profit of $36.5 million, or $1.55 a share, in its fourth quarter, ended Jan. 28, a 28% increase from a year earlier. Revenue rose 6.7% to $364.3 million.

The retailer’s same-store sales increased 7.6% in the quarter; customer count was up 3.4% while the average purchase amount saw a 4.1% boost.

Cost Plus stock was up nearly $4, or 22%, to $21.89 in morning trading. The company’s stock has been on a tear since the start of the year, rising 85% through Tuesday. Competitor Pier 1, by comparison, has seen a 17% increase to $16.27 a share Tuesday from $13.90 a share on Dec. 30.

Shares of Bed Bath & Beyond were up less than a percent to $68.60 Wednesday morning.

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