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Bed Bath & Beyond Acquires One Kings to Counter Amazon
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Bed Bath & Beyond Inc. has acquired One Kings Lane Inc., an online home furnishings retailer, to take forward its mission of being a one-stop shop for home goods. Though the real value of the deal is not known, market bugs circulated that Bed Bath & Beyond cracked this all-cash deal much lower than One Kings’ previously disclosed valuation of $900 million.
One Kings, popular as a flash-sales website, sells home décor and designs including exclusive range of selected home goods, designer and vintage items. The company is directly associated with home furnishing brands, vintage dealers, designers and tastemakers to bring forward a unique collection of merchandise. Further, the company also delivers design inspiration and expert style solutions, along with complimentary interior designing services at its two design studios in San Francisco and New York.
The deal is likely to benefit both Bed Bath & Beyond and One Kings to counter competition from e-commerce giant Amazon.com Inc. (AMZN - Free Report) , which dominates the e-commerce business world with its pricing power advantage. As for Bed Bath & Beyond, it is facing the threat of losing market as Amazon expands its home goods offerings and proclaims its dominance in the segment. On the other hand, One Kings like its fellow flash-sales sites is struggling to establish footing in the e-commerce space dominated by Amazon.
One Kings expects to gain from Bed Bath & Beyond’s support and resources to further expand its product lines as well as refine its business ideas to benefit its present and future customers. While Bed Bath & Beyond believes the acquisition will prove to be a key milestone to bolster its furniture and home décor offerings. Collectively, both companies expect this union to help them better serve their customers.
Further, Bed Bath & Beyond expects the transaction to bear no impact on its first-quarter fiscal 2016 results, which will be released on Jun 22, as the transaction has occurred in the second quarter. However, the transaction and related integration costs are expected to be slightly dilutive to the company’s fiscal 2016 earnings per share.
Bed Bath & Beyond currently has a Zacks Rank #4 (Sell), as the company is affected with issues that have been impacting its top and bottom line results. Though the company delivered an encouraging earnings picture in fourth-quarter fiscal 2015, we cannot ignore the fact that its exposure to the international markets has been weighing on its quarterly performance mainly due to the strengthening U.S. dollar. Moreover, the company’s margins remain pressurized mainly due to soft merchandise margins and a rise in net direct-to-customer shipping costs.
Going forward, persistence of these unfavorable currency fluctuations is likely to weigh on the company’s results, thus posing concerns.
Stocks That Warrant a Look
Some better-ranked stocks in the same industry include Cabelas Inc. and ULTA Salon, Cosmetics & Fragrance Inc. (ULTA - Free Report) , each carrying a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
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Bed Bath & Beyond Acquires One Kings to Counter Amazon
Bed Bath & Beyond Inc. has acquired One Kings Lane Inc., an online home furnishings retailer, to take forward its mission of being a one-stop shop for home goods. Though the real value of the deal is not known, market bugs circulated that Bed Bath & Beyond cracked this all-cash deal much lower than One Kings’ previously disclosed valuation of $900 million.
One Kings, popular as a flash-sales website, sells home décor and designs including exclusive range of selected home goods, designer and vintage items. The company is directly associated with home furnishing brands, vintage dealers, designers and tastemakers to bring forward a unique collection of merchandise. Further, the company also delivers design inspiration and expert style solutions, along with complimentary interior designing services at its two design studios in San Francisco and New York.
The deal is likely to benefit both Bed Bath & Beyond and One Kings to counter competition from e-commerce giant Amazon.com Inc. (AMZN - Free Report) , which dominates the e-commerce business world with its pricing power advantage. As for Bed Bath & Beyond, it is facing the threat of losing market as Amazon expands its home goods offerings and proclaims its dominance in the segment. On the other hand, One Kings like its fellow flash-sales sites is struggling to establish footing in the e-commerce space dominated by Amazon.
One Kings expects to gain from Bed Bath & Beyond’s support and resources to further expand its product lines as well as refine its business ideas to benefit its present and future customers. While Bed Bath & Beyond believes the acquisition will prove to be a key milestone to bolster its furniture and home décor offerings. Collectively, both companies expect this union to help them better serve their customers.
Further, Bed Bath & Beyond expects the transaction to bear no impact on its first-quarter fiscal 2016 results, which will be released on Jun 22, as the transaction has occurred in the second quarter. However, the transaction and related integration costs are expected to be slightly dilutive to the company’s fiscal 2016 earnings per share.
Bed Bath & Beyond currently has a Zacks Rank #4 (Sell), as the company is affected with issues that have been impacting its top and bottom line results. Though the company delivered an encouraging earnings picture in fourth-quarter fiscal 2015, we cannot ignore the fact that its exposure to the international markets has been weighing on its quarterly performance mainly due to the strengthening U.S. dollar. Moreover, the company’s margins remain pressurized mainly due to soft merchandise margins and a rise in net direct-to-customer shipping costs.
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Going forward, persistence of these unfavorable currency fluctuations is likely to weigh on the company’s results, thus posing concerns.
Stocks That Warrant a Look
Some better-ranked stocks in the same industry include Cabelas Inc. and ULTA Salon, Cosmetics & Fragrance Inc. (ULTA - Free Report) , each carrying a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>