When a big-name brand goes bankrupt and has its intellectual property sold at auction, the buyer usually uses the name to leverage the recognition factor.
That's what happened with Sharper Image, a retailer known for high-end items like expensive massage chairs, drones, and other technology-forward items.
The new owner of the brand has not tried to bring the company back as it was. Instead, the company that purchased the Sharper Image name has splashed it on low-end toys designed for adults.
Related: Popular retail chain begins bankruptcy liquidation sales
The product line features things like putting greens for your office and other items that vaguely evoke what the company used to sell.
The new owner has no interest in bringing the brand back. It's just leveraging a name people of a certain age know to get attention for novelty products sold on Target's shelves.
That's usually what happens when a big brand name goes out of business and sort of comes back. At best, you get Toys "R" Us, which has returned looking nothing like the big-box retailer it once was but has had its name revived on the new toy sections at Macy's.
Real comebacks are rare. The former Overstock.com. however, has bet its future on the Bed Bath & Beyond brand. The company has not only purchased the IP of the retailer after it declared Chapter 7 bankruptcy, it has rebranded under its name.
That's not just a name change; it's a huge pivot for Overstock. The company's chief executive, Jonathan Johnson, laid out why his company made the purchase and what it plans for the future during its third-quarter-earnings call.
Image source: TheStreet
Overstock wants to bring back Bed Bath & Beyond
"Over the last three months, we have accelerated our efforts to build the company with a bigger, brighter, bolder future," Johnson said.
"On June 28, we acquired the Bed Bath & Beyond brand and IP, a brand ranked in the top five most recognizable home brands in the United States, alongside titans like Target, Walmart, and Home Depot.
"Within hours of closing the deal, we revived the brand in Canada, and in just 33 days we launched the brand in the U.S. under our unique asset-light operational model."
Asset light means digital without stores. Johnson explained that Overstock (OSTK) -) had actually considered buying Bed Bath & Beyond "just a few years ago." That purchase would have cost roughly $2 billion.
Even after passing, Johnson remained interested for a number of reasons.
"We saw four valuable assets in the business if the right opportunity presented itself," he said.
"First, the No. 5 most recognizable brand in the home space and as an aside in that same ranking Overstock was No. 25; second an over 100 million person customer file; third, vendor relationships with some of the biggest home category brands in the world; and fourth, valuable intellectual property."
Johnson believes that the purchase decision was obvious.
Here's what's planned for Bed Bath & Beyond
Johnson says his brand has a better chance to succeed under the Bed Bath & Beyond name.
"We were thrilled when that opportunity presented itself and we pounced on it. To strengthen the clarity of the economics of this deal we break down this opportunity into two buckets totaling up to approximately $175 million. First, the approximately $25 million paid to the bankruptcy state for the brand and related IP and acquisition-related fees," he said.
The big opportunity, however, comes with the remaining investment the company plans to make. Johnson's company plans to spend $150 million to leverage the customer names it has acquired. That will include moving into Bed Bath & Beyond's traditional categories, which is an expansion beyond Overstock's roots.
In addition, the company has again tweaked its corporate identity.
"Earlier this week, we announced our new corporate name Beyond. This new corporate identity builds on the value of our iconic consumer brand. It also recognizes our ability to transform into more than just a single-brand e-commerce retailer," he said.
"Our goal is over time to transform the company into a house of brands, providing a mix of products and services across categories."
Johnson outlined what that will look like going forward.
"Think of this as a bigger, better, bolder Beyond," he said. "Today, we provide a broad selection of on-trend furniture and home furnishing products through a single e-commerce website, Bed Bath & Beyond.
"In due time, we plan to reimagine the Overstock brand with a standalone website that offers what the brand originally was: a site selling a broad array of clearance products at remarkable prices."
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