Dive Brief:
- Building on a partnership that started early this year, Beyond has entered into an agreement to acquire Kirkland’s intellectual property for a purchase price of $5 million, according to a Monday filing from Kirkland’s. Beyond said in a Monday press release that it intends to license the trademarks back to Kirkland’s.
- Additionally, Beyond has agreed to a $5.2 million expansion of the existing credit facility with Kirkland’s. Beyond’s share of Kirkland’s quarterly retail revenue was increased from 0.25% to 0.5% and will now only apply to physical sales, while an additional incentive fee will be tied to e-commerce revenue. The updated deal also eliminates Kirkland’s 3% “royalty obligations on net sales in Kirkland’s-operated Bed Bath & Beyond and Overstock retail locations,” per the release.
- The move features several other changes to the retailers’ partnership, including the ability for Beyond to acquire up to 65% of Kirkland’s outstanding capital stock, per a press release from Kirkland’s Monday.
Dive Insight:
The latest news from Beyond and Kirkland’s adds several layers to an already complex retail partnership.
“We have broadened the brick-and-mortar store conversion strategy to include the Bed Bath & Beyond Home concept and BuyBuy Baby,” Beyond Executive Chairman and Principal Executive Officer Marcus Lemonis said in a statement. “We also see great value in enhancing our intellectual property portfolio to include Kirkland’s Home within our family of brands alongside Bed Bath & Beyond, Overstock, and BuyBuy Baby, among others. We expect this to enhance Beyond’s brand equity and unlock new revenue streams across retail formats.”
With an amendment to the companies’ existing license agreement, Kirkland’s is now allowed to open and operate Bed Bath & Beyond Home and BuyBuy Baby stores within the neighborhood format retail footprint.
New amendments to a stockholder agreement between the retailers also open up the potential for Beyond to become more influential on Kirkland’s board.
The expanded credit agreement allows Beyond to convert the outstanding debt into shares of Kirkland’s common stock. A Friday filing from Beyond says that the company’s share of common stock in Kirkland’s, along with the stock it has the right to acquire upon conversion, amounts to 19.9% of the shares of common stock outstanding as of Wednesday. .
The amended deal allows Beyond to appoint one nominee to Kirkland’s Board of Directors as long as it beneficially owns at least 5% of Kirkland’s then-outstanding common stock. Beyond can appoint two new directors once it beneficially owns 20% and three directors if it owns at least 50% of the outstanding common stock.
If Beyond chooses to exercise its rights, up to three existing directors must resign from the board, and Beyond will also have the right to appoint one person as a nonvoting observer to Kirkland’s board.
Kirkland’s President and CEO Amy Sullivan was elected to Kirkland’s board in June of 2024 while two existing board members resigned after not receiving a majority of the votes cast. Kirkland’s former interim CEO Ann Joyce was re-elected to the board as Chair and reduced the Board’s size from eight to six members.
The new elements in Beyond and Kirkland’s relationship come after the home goods companies entered into a strategic partnership in October. Beyond (which operates Bed Bath & Beyond, BuyBuy Baby and Overstock) initially gave Kirkland’s the ability to operate five neighborhood small-format Bed Bath & Beyond stores as their exclusive operator and licensee.
Kirkland’s Q4 earnings report earlier this month revealed that the company’s net sales dropped about 10% year over year to $148.9 million and net income for the quarter fell about 22% to $7.9 million.