Beyond Expands Financial Backing Of Kirkland's
Kirkland’s has closed on a $5.2 million credit line expansion with Beyond, Inc., a move the company said will strengthen its position and provide flexibility for working capital purposes and support the home specialty retailer’s updated store conversion strategy.
Additionally, the companies have entered into a purchase agreement providing for the future sale of Kirkland’s intellectual property to Beyond, subject to senior lender approvals.
“This additional capital, along with supporting our operational needs, enables us to accelerate store conversion plans as we prioritize the rollout of Bed Bath & Beyond Home stores as well as Overstock stores, and continue plans for opening buybuy BABY and Bed Bath & Beyond True Blue stores,” said Amy Sullivan, president and CEO of Kirkland’s. “We see a tremendous opportunity to leverage the power of these brand names, which we believe will drive more consistent traffic, improve inventory turns, and ultimately raise the productivity of our store base.”
Sullivan said the Bed Bath & Beyond Home brand will allow Kirkland’s to maximize its current product assortment and expand into other categories, including textiles and tabletop.
Marcus Lemonis, Beyond’s executive chairman and principal executive officer, said the company’s investment in Kirkland’s represents another step in its vision to create a family of brands that serve shoppers online and in local communities.
“We have broadened the brick-and-mortar store conversion strategy to include the Bed Bath & Beyond Home concept and buybuy BABY,” he said. “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.”
In connection with the credit facility expansion, Kirkland’s and Beyond have agreed to certain amendments and modifications to existing transaction and collaboration agreements previously entered into between the companies, including:
- Expanding the scope of licensed brands to include an exclusive license to develop and operate Bed Bath & Beyond Home and buybuy BABY stores within the neighborhood format retail footprint.
- Enhanced collaborative efforts to maximize synergies, reduce costs, and improve efficiencies to drive improved operating results.
- Modified collaboration fee from 0.25% of all revenues to 0.50% of brick-and-mortar retail revenues only to capture expanded branding opportunity while eliminating the 3.0% licensed brand royalty.
- Amendments to the company's existing credit agreement with Beyond to allow Beyond the right to convert outstanding debt owed to Beyond thereunder into shares of Kirkland's common stock at a price determined at the time of such conversion election, but subject to Nasdaq shareholder approval rules, if applicable.
- Amendments to Beyond stockholder agreements to provide Beyond the right to add a third director nominee to the company's board of directors in the event that Beyond owns more than 50% of the outstanding capital stock of the company, and to remove standstill, voting, and transfer restrictions.
