So, Bed Bath & Beyond (BBBY) is trying to become your home renovation buddy. Shares popped over 10% on Wednesday after the company said it's buying F9 Brands—the parent of Cabinets To Go and Lumber Liquidators—for nearly $150 million. That's a pretty big check for a retailer that had about $207 million in cash and equivalents at the end of last year.
Here's how the math works: $37 million in cash, plus roughly 16 million BBBY shares valued at $7.00 each. At current prices, that adds up to around $107 million. And there's a little bonus on the table: the sellers could get an extra $25 million if F9 Brands manages to hit $20 million in EBITDA any time in the next five years. The deal should wrap up after Bed Bath & Beyond's annual meeting in May.
Why do this? Well, it's all about moving into stuff that makes more money. Instead of just selling you a towel rack, Bed Bath & Beyond wants to help you redesign your whole bathroom—cabinets, flooring, the works. CEO Marcus Lemonis put it this way: each F9 brand "owns a distinct category"—think modular storage, custom closets, flooring, cabinets, and countertops. "Together with our installation services and field sales organization, we can take the homeowner through the full lifecycle of a renovation, all under one platform," he added. F9 pulled in about $522 million in sales last year, so it's not exactly a side hustle.
Now, let's talk about the stock. It was up 13.79% to $4.95 in premarket trading, which is a nice bump. But if you look at the charts, things are a bit messy. At $4.65, it's trading just below its 20-day simple moving average of $4.70, and it's well under its 50-day and 100-day averages. The relative strength index is sitting at 35.91, which is basically neutral—no strong momentum either way. The MACD, though, is hinting at some upward potential. Key levels to watch: $5.00 as resistance (where sellers might jump in) and $4.25 as support (where buyers could show up).
How does this fit into the bigger picture? The Consumer Discretionary sector was up 3.79% on Tuesday, so Bed Bath & Beyond's move isn't happening in a vacuum. But over the past month, the sector's down almost 6%, which shows how tough retail has been. The company's next earnings report is due April 27, with analysts expecting a loss of 31 cents per share (better than last year's 42-cent loss) and revenue of $238.85 million. The analyst consensus? It's a Sell, with an average price target of $7.36. Recent moves include Piper Sandler cutting its target to $8.00 but keeping a Neutral rating, Wedbush lowering its target to $7.00 with an Outperform, and Barclays bumping its target to $8.00 with an Equal-Weight.
In short, Bed Bath & Beyond is making a bold play to get into your home in a whole new way. Whether investors stick around for the renovation remains to be seen.
