Bed Bath & Beyond will sell its home and baby stuff at…Kroger

Bed Bath & Beyond (BBBY) will sell some of its bedding, storage and baby furniture at Kroger (KR) beginning next year, the two companies announced Tuesday. Bed Bath & Beyond’s items will first be available on Kroger’s website for delivery in early 2022 and then in dedicated mini shops at select Kroger stores.

Bed Bath & Beyond also said Tuesday that it will start its own third-party marketplace online to expand its product assortment and would complete a three-year $1 billion stock buyback program two years ahead of schedule.

The company’s stock surged around 80% after the announcement.

Bed Bath & Beyond hopes its partnership with Kroger will help it reach new customers and open a new revenue opportunity for the company. Bed Bath & Beyond also said it will sell some of its own private-label brands at Kroger.

Bed Bath & Beyond is attempting a turnaround under a new CEO after years of disappointing sales and store closures. The company grew early in the pandemic as customers spending more time at home bought home goods, but sales slumped over the summer amid supply chain challenges.
For Kroger, selling home and baby items may allow it to offer customers more than groceries when they shop on its website or visit its stores — much as some of its competitors like Walmart (WMT) do now. Kroger last year created an online marketplace for third-party sellers and it’s looking to add more merchandise to the site.

Neil Saunders, the managing director of GlobalData Retail, said in a note to clients that the partnership offers benefits for both chains.

“Kroger represents a huge channel for Bed Bath & Beyond and can bring more shoppers into contact with the brand. This alone will help the company resolve one of its key issues: remaining on the consumer radar,” he said. “Kroger itself needs to push beyond groceries and bolster its non-food business, so the partnership with Bed Bath & Beyond makes strategic sense.”

Other companies have struck unlikely partnerships in recent years, such as Kohl’s and Weight Watchers and Apple and Target.
Walmart and Gap announced a tie-up over the summer to sell Gap homegoods on Walmart’s website.

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