Bebe’s latest move shows just how far the fast fashion brand has come from its roots.
On Monday, the clothing store and Bluestar Alliance, a private equity firm that manages a variety of brands, announced a partnership to acquire the Brookstone brand and all of its assets.
Both Brookstone and Bebe stores have been under pressure in recent years as e-commerce becomes a bigger contender in the retail landscape and malls across America struggle to retain traffic. As a result, brand acquisitions of brick-and-mortar companies are an increasingly common way to stay afloat.
But there’s one noticeable difference in this deal: Brookstone isn’t a clothing store. In fact, the retailer, founded in New Hampshire half a century ago as a mail-order business, now sells massage chairs, golf accessories, luggage tags, lawn chairs, phone chargers and sound machines, among other gadgets — but no clothes.
The acquisition of Brookstone by Bebe and Bluestar, which also owns other defunct brands like Tahari and Limited Too, will keep 30 Brookstone airport stores open. Bebe declined to comment on the acquisition.
“This investment…will create a strong platform for future growth and enhance our ability to generate free cash flow to maximize our dividends to shareholders,” Manny Mashouf, founder and ceo of Bebe stores, said in a press release.
The likelihood that Brookstone products will show up on bebe.com, or in its international stores, is small, said Gerald Storch, ceo of Storch Advisors, a retail advisory firm. So is the chance that Brookstone will open new brick-and-mortar locations.
“But Brookstone still has tremendous equity,” said Storch, who also served as vice chairman of Target and ceo of Hudson’s Bay Company. “The brand has meaning to customers and can be leveraged.”
That could include developing new products sold through Brookstone.com and in wholesale channels like department stores or big box retailers such as Best Buy, Storch said.
It’s not known how much Bebe and Bluestar paid for the acquisition. Nor is it clear the link between Bebe and Brookstone.
“He’s an entrepreneur,” Storch said, referring to Bebe founder Manny Mashouf. The acquisition, Storch pointed out, “may have been a good deal.”
Brookstone filed for Ch. 11 bankruptcy in 2014 and was bought by Chinese conglomerate Sanpower for $173 million. Then in August, it filed for bankruptcy again, closing 102 retail locations.
Meanwhile, Bebe, the fast fashion brand for young women that enjoyed its heyday in the late Nineties and early 2000s, has grappled with growing competition from Amazon, as well as Millennial-focused brands like H&M and Zara. Under growing financial pressure, Bebe formed a venture with Bluestar Alliance two years ago. According to the terms of the deal, Bluestar contributed $35 million and Bebe contributes its intellectual property, but remains a publicly traded company. Still, the company closed its remaining brick-and-mortar locations in April 2017, saying it would focus on its website. The company reopened its flagship in Manhattan, the only remaining Bebe in the U.S., the following year.
Bebe’s stock was down more than 30 percent after the announcement. Shares were priced around $4.60 a piece Monday morning — a drastic difference from the company’s 2005 peak when shares were trading around $285.
The acquisition closed on Oct. 19.