Roughly Nine Months after Being Named Executive Chairman of Beyond, it's Clear that Marcus Lemonis is the "Man in Charge" as Beyond Unveils Five Major Announcements / Initiatives in the Past Six Weeks

What are these five major announcements / initiatives?

ONE: A global licensing program;

TWO: A Strategic Partnership with, and a $40 million investment in, The Container Store;

THREE: A Strategic Partnership with, and up to $25 million in investments into, Kirkland's, including with four separate financial agreements with the retailer;

FOUR: The introduction of a new "Positioning Statement" for Beyond, one that discloses a new focus/direction for the firm; and

FIVE: A 20% Reduction-in-Force (aka, a Layoff) at Beyond.

On 20 February 2024, the 50-year-old celebrity entrepreneur/centi-millionaire, Marcus Lemonis, was officially named Executive Chairman of Midvale, Utah-based Beyond (NYSE:BYON).

But any questions about who is actually in charge at the former Overstock.com / Bed Bath & Beyond have now been laid to rest as the Lemonis-led Beyond has unveiled five major announcements / initiatives during the past 6+ weeks that reveal a clear recasting, and direction, for Beyond on a go-forward basis.

In summary, these announcements / initiatives are ...

Announcement No. 1: A Global Licensing Program

Beyond announced on 10 September 2024 that it had "... launched a new global licensing program, starting with the Bed Bath & Beyond brand name."

• In the release, Lemonis says: “Through affordable, quality goods that will soon be on retail shelves – both physical and online – we’re reinvigorating the brand and returning it to its core. The Bed Bath & Beyond brand is both aspirational and attainable, and our brand will continue to reflect these values.”

Announcement No. 2: A Strategic Partnership with, and a $40 Million Investment in, The Container Store Group

On 15 October 2024 Beyond announced a multi-part strategic partnership with The Container Store Group (NYSE:TCS) that includes a $40 million preferred equity investment by Beyond into Container Store, an investment that could lead to Beyond owning up to 40% of The Container Store Group.

In the release, Lemonis said:

“We see tremendous whitespace for The Container Store’s best-in-class, solution-based offerings across the entire Beyond portfolio ... Partnerships like this further support the value of iconic brands leveraging each other’s assets and core competencies while improving customer conversion and retention, enhancing margins, and optimizing marketing expenses which are the principal drivers in delivering value creation and profitable growth."

Additional highlights of the Beyond/Container Store agreement include

• Incorporation of Bed Bath & Beyond branded kitchen, bath, and bedroom products into co-branded "Custom Spaces" within various Container Store locations.

• Beyond providing The Container Store with "... a global loyalty program, multiple payment solutions and ancillary insurance and protection products through ... Container Store brick-and-mortar locations and website ..."

• Beyond integrating (and selling) "... Custom Spaces offering(s), including its Elfa and Preston product lines ..." through Beyond's various online eCommerce properties, as well as future Bed Bath & Beyond retail locations.

• "The Container Store ... joining Beyond’s ... data platform ... to improve conversion, drive traffic, and reduce both customer acquisition and retention costs (with) ..."
  — "... Both companies ... benefiting from enhanced customer analytics (and with) ..."

• "Beyond ... assisting (The Container Store) with expanded and renewed e-commerce platforms and strategies, driving improved customer experience, customer conversion, traffic monetization, and profitability."

Announcement No. 3: A Strategic Partnership with, and up to $25 million in investments into, Kirkland's, including four separate financial agreements with the retailer.

Beyond announced on 21 October 2024 that it had entered into a Strategic Partnership with Kirkland's (NASDAQ:KIRK), as well as four separate financial agreements with the retailer.

Specifically,

1. "... a $17 million Term Loan Credit Agreement with Beyond, $8.5 million of which consists of a convertible note that will convert into Kirkland's common stock at a price of $1.85 per share upon the approval of Kirkland's shareholders."

2. "... a Subscription Agreement pursuant to which Beyond will purchase an additional $8 million of Kirkland's common stock at the Conversion Price upon the approval of Kirkland's shareholders."

3. "... a seven-year Collaboration Agreement (wherein) Beyond will earn ... collaboration fees from Kirkland's ..." equal to 0.25% of Kirkland's retail and eCommerce revenue, plus
   — A 1.5% incentive fee for Kirkland's incremental eCommerce growth (also for the entire term of the Collaboration Agreement, aka, seven years), plus

4. A Trademark License Agreement that earns Beyond a 3% "store royalty fee" from Kirkland's during the seven-year Collaboration Agreement, with that fee jumping to 5% after the Collaboration Agreement ends (as long as the given stores are still operational).

In the release, Lemonis said,

"... Kirkland's Home (is) an ideal organization to help bring the iconic Bed Bath & Beyond brand back."

As part of these agreements,

• Kirkland's will become Beyond's exclusive, nationwide brick-and-mortar operators and licensees for new small format (≤15,000-square-foot), "neighborhood" Bed Bath & Beyond stores.

• "Kirkland's (will also ) participate in Beyond's consumer data collective, global loyalty program, financial services, and consumer protection products ... to (help) drive traffic and revenue, ... increase ... conversion, and lower ... customer acquisition and retention costs."

Last of All, Through Yesterday's Release of its Third Quarter Results, Beyond made Announcements Numbers 4 and 5

Announcement No. 4: Beyond has Significantly Updated its Positioning Statement, and Ergo, has Changed its Focus as a Business.

Often, companies will begin news releases by enclosing a brief "Positioning Statement" (or phrase) within the first (or "lede") sentence / paragraph of their announcements as a way of helping readers quickly understand what it is the firm does or what its focus is.

For example, when Lemonis was named Beyond's Executive Chairman on 20 February 2024, the positioning statement in the lede sentence of that release described Beyond as

"... owner of Bed Bath & Beyond, Overstock.com, and other online retail brands designed to unlock your home’s potential ..."

From that announcement until 21 October 2024, Beyond published 22 different news releases.

Not counting minor tweaks, each carried essentially the same positioning statement in the lede sentence as being an online retailer focused on the home.

That is until yesterday (Thursday, 24 October 2024) when Beyond announced its financial results for its third quarter, ended 30 September 2024.

In that release, Beyond's positioning statement in the lede sentence changed significantly to now read:

"... an asset-light ecommerce and affinity data monetization company offering a comprehensive array of products and services that enable its customers to unlock their home’s potential ..."

So there is no mistake about this, these represent massive changes to Beyond's positioning statement, and ergo, its business focus:

• "An asset-light ecommerce ... company ..." (emphasis added)
• "An ... affinity data monetization company ..." (emphasis added)
• A company that offers "... a comprehensive array of products and services ..." (emphasis added)

As someone who has written, edited, and published well over 1,000 news releases during my careeer for private and publicly held companies alike, please know that these editorial changes were NOT made lightly.

Additionally, note the additional clue that Lemonis shares in his quote from yesterday's release about the now disclosed new direction for Beyond, specifically:

“We are still in the early innings of creating a robust data cooperative that will serve as the affinity and loyalty program foundation ..."

Additionally, Beyond President, Dave Nielsen, explained in the release that ...

"As we continue to transform and build out our model, we intend to monetize data through our enhanced CRM and database capabilities, stand up a global loyalty program across both our owned and partnered brands, and leverage our IP through a variety of global licensing partnerships.” (emphasis added)

In other words, add these new phrases to the modified positioning in Nielsen's quote provide additional clues about the direction, initiatives, and focus of the "new" Beyond:

1. "A robust data cooperative,"
2. "Enhanced CRM and database capabilities," and
3. "A global loyalty program."

As such, I expect Lemonis and/or other Beyond execs, to provide additional specifics about these new directions, focus, products, and services in the weeks and months ahead.

Announcement No. 5: Beyond Is Laying-Off 20% of its Workforce.

As noted in its Form 8-K filed with yesterday with the U.S. Securities and Exchange Commission, Beyond wrote that:

"On October 20, 2024, the board of directors of the Company approved a RIF (Reduction-In-Force) affecting approximately 20% of the Company’s workforce, which is expected to be substantially implemented in the fourth quarter of 2024. These actions were taken to strategically create a more variable, leverageable cost structure and create a more streamlined organization to align to its asset-light business that supports an affinity and data monetization model with a strong technology focus. The Company estimates the RIF will result in annualized reduction of fixed costs by approximately $20 million."

As of the date/time this article was published, Beyond had not disclosed how many individuals would be laid-off as a result of this RIF.

My best guess places the likely total to be somewhere between 150 to 200 workers.

Last of all, Beyond's Net Revenue and Net Losses do not Appear to have Stabilized Yet.

In simplest terms, for its third quarter (ended 30 September 2024), Beyond had net revenue of $311 million and a net loss of $61 million vs. net revenue of $373 million and a net loss of $76 million in the year ago quarter.

Similarly, on a nine-month basis, Beyond had net revenue of $1.09 billion and a net loss of $177.5 million vs. net revenue of $1.18 billion and a net loss of $147.8 million in the comparable nine-month period.

{NOTE: Although Beyond distributed its quarterly results news release yesterday, it had not filed its Form 10-Q with the U.S. Securities and Exchange Commission for the 2024 Third Quarter (ended 30 September 2024) prior to our publication of this writeup. As such, no additional commentary or explanations about Beyond's financial results were available beside what was published in yesterday's quarterly results news release from the company.}

Beyond's top revenue year was the COVID-19 impacted 2021, when its annual sales hit $2.76 billion.

However, 2022 sales dropped to $1.93 billion and then $1.56 billion in 2023, in combo a whopping 56% decline in just 24 months.

Given that Beyond generated $356 million in top line revenue in the 4th quarter of 2023 and that quarterly revenue has been trending downward of late, I suspect it highly unlikely that this downward trend will reverse itself in the current quarter.

Final Thoughts

It's virtually impossible to live and work in the mythical "Silicon Slopes" of Utah and not know about Overstock / Overstock.com / Bed Bath & Beyond / Beyond.

And to be clear I've met and/or known

• Patrick Byrne, the founder of Overstock;
• Johnathan Johnson, Overstock CEO from September 2019 through November 2023; and
• Marcus Lemonis, (although, to be honest, I suspect he has zero recollection of our handshake/interaction of under 60 seconds at the Camping World store in Draper a few years back).

Am I friends with any of these three execs?

No, not by a long shot.

But I am a fan of what is now known as Beyond.

And to be clear, I'm definitely a "fanboy" of Lemonis — have been ever since he hit national consciousness in mid-2013 as the celebrity star and small business turnaround specialist / investor of the behind-the-scenes reality show, The Profit.

This being the case, I have no doubt, whatsoever, that since February 2024 Lemonis is the ultimate boss at Beyond.

As such, he is clearly the person setting this new direction/focus for Beyond.

Will it work?

Will it lead to a turnaround at Utah's historically largest eCommerce player?

I dunno.

But do I hope he and Beyond are successful?

Absolutely.

Publisher's Note

Are you interested in timely Utah-focused monetary, financial, and/or business news, context, and analysis, content NOT currently available through any other source?

Then you should become a subscriber to Utah Money Watch. Today!

Simply,

1. Click on a "Subscribe" button on any Utah Money Watch webpage,
2. Enter in your name in the proper field in the popup window that appears on-screen, and
3. Enter your preferred email address in the proper field too.

That's it. And "Yes," it really is that simple.

And it IS free ... for now, at least.

So we hope to see you join us as a subscriber of Utah Money Watch.

Thanks.

Team Utah Money Watch

P.S. For context, the purpose of Utah Money Watch is to publish news, information, context, and analysis NOT available through any other source.

[You might think of us as the inverse of Bloomberg, CNBC, and/or The Wall Street Journal. In other words, we are passionately focused on uncovering the most important monetary, financial, and/or business news and information that impact the organizations and people of Utah first, followed by regional news/info second, and national/international info/news last of all.]

To that end, this article/report was originally published and distributed to our Subscribers at approximately 8:45am (MT) on Friday, 25 October 2024.

However, if this report/article came to your attention sometime after this date/time and you'd like to change that, then to become a subscriber, please follow the steps above.

Thx. DLP