Bed Bath & Beyond returns in a 19,000-square-foot Arizona store

By Nathan Brooks

A 19,000-square-foot Bed Bath & Beyond will open Saturday in Arizona, bringing back the retailer’s towel wall, bedding displays and famous coupons under parent Neighborhood Intelligence.

The standalone store reprises the chain’s original format as Neighborhood Intelligence recalibrates a store fleet expanded through acquisitions of Kirkland’s and The Container Store.

“We’re bringing back the things customers have always loved, from the iconic shopping experience to the brands, products, and value they remember, while introducing new ways to help customers make the most of every room in their home,” Neighborhood Intelligence President Amy Sullivan said in a statement.

What does the Arizona opening change for shoppers and the store portfolio?

For shoppers, it restores a recognizable Bed Bath & Beyond presentation while adding products intended to help them use every room. For Neighborhood Intelligence, the standalone store revives the original banner alongside the co-branded Container Store format launched in spring.

That earlier concept combined organizational products, design services and a broader home-product assortment. The Arizona site takes over a former Container Store location that was also four-wall negative, CEO Marucs Lemonis said.

Neighborhood Intelligence will close 11 Container Store locations by the end of the year and is shuttering 39 Kirkland’s locations, Lemonis told analysts Thursday. He said the affected stores were four-wall negative, and many had leases expiring in January.

Neighborhood Intelligence has called off deals with Fathom Holdings and F9 Brands in recent months. Lemonis said the company sees significant opportunity in the businesses it already owns and will pursue no more acquisitions. The priority, he said, is to make those businesses work together, grow organically and improve profitability.

Revenue rises 98%, losses widen

In its third-quarter earnings report Thursday, Neighborhood Intelligence said revenue rose 98% to $509 million. The company said acquisitions contributed $229 million; excluding them, revenue increased about 9%. Gross margin was about 34%.

E-commerce revenue rose 9%, the company said, the strongest growth in 19 quarters, driven primarily by 75% growth at Overstock.com. The Bed Bath & Beyond banner added $23 million in year-over-year revenue, with order volume up 1.5% and average order value up 7.4%.

Profitability moved the other way. Neighborhood Intelligence reported an operating loss of $62 million—nearly five times the roughly $12.5 million year-ago loss—and a net loss of more than $26 million versus $4.5 million.

“What gives me confidence is that we’re not relying on a housing recovery to make this business work,” Lemonis said. He said consumers face affordability challenges and historically low housing turnover, yet continue spending on maintaining, organizing and improving their homes. He added that Neighborhood Intelligence’s brands can serve those needs now and benefit as housing activity improves.

A 37% margin target

Neighborhood Intelligence projects fourth-quarter revenue 5% above the third quarter on a sequential basis, a forecast that factors in store closings. For 2027, the company expects $2 billion to $2.1 billion in consolidated revenue and a 33% to 34% gross margin. Lemonis sees gross margin eventually sitting closer to 37%.

Lemonis said the company has learned over roughly eight quarters how to generate margin by eliminating unprofitable SKUs and vendors and calibrating assortment and sourcing. The Kirkland’s acquisition supplied a global sourcing team for that effort.

Lemonis also identified errors that preceded the 2023 bankruptcy, including Bed Bath & Beyond’s retreat from major brand partners Shark, Cuisinart and Laura Ashley. He said The Container Store, by contrast, balances products that give shoppers confidence with global sourcing that creates demand, preserves pricing flexibility and supports the route to a 37% gross margin.

The Home Edit exits

The Home Edit said Thursday that its products will be removed from The Container Store, ending a relationship that began with an exclusive collection in 2019. Co-founders Clea Shearer and Joanna Teplin said in an Instagram video posted Thursday that they were surprised by the decision.

They said the retailer appeared to be working out a new identity that no longer included the brand. They added that the brand would move very soon to unspecified retailers. Sullivan disputed that account, calling it not fully accurate in an email to Retail Dive.

Sullivan said a one-year agreement in place when Neighborhood Intelligence acquired The Container Store expires in December 2026. Neighborhood Intelligence will not renew because the product’s sales rate does not support a reorder, Sullivan said. The company will keep selling the remaining assortment and honor the relationship.

Sullivan said The Container Store is adding inventory across bathrooms, bedrooms and kitchens while recalibrating and revitalizing its legacy storage and organization department. That gives shoppers more category breadth while Neighborhood Intelligence focuses on product economics.

She said store productivity is only part of the opportunity. Kirkland’s brought product development, global sourcing and direct factory relationships, allowing Neighborhood Intelligence to complement national brands with differentiated products, improve product costs and strengthen margins.

She expects meaningful benefits from the new sourcing and assortment programs to begin in the middle to latter part of 2027.

With the Arizona store putting a familiar banner back on the street, Neighborhood Intelligence now has two clocks running: a $2 billion-to-$2.1 billion 2027 revenue plan and a sourcing overhaul whose meaningful benefits do not begin until later that year. The towel wall is back. The margin math is the harder sell.