Dive Brief:

• A joint venture by Marquee Brands and CSC Generation bought Sur La Table out of bankruptcy this week for $88.9 million, according to court documents.
• Marquee will add the nearly 50-year-old retailer to a portfolio now worth $3 billion in sales, with the kitchenware retailer marking Marquee's 12th brand acquisition. Marquee said in a press release that Sur La Table would complement its Martha Stewart and Emeril Lagasse brands in the culinary arena.
• Marquee said that it has "tapped CSC Generation for a long-term partnership in developing innovative products and for their operational expertise in the home sector across retail stores and data driven ecommerce solutions."

Dive Insight:

The COVID-19 pandemic has accelerated retail bankruptcies, and more are coming. Among bankrupt retailers, a lot are going to be looking to sell themselves. As Pier 1 and Stage Stores demonstrate, not every bankrupt company that wants to sell itself will find a willing buyer. 

Sur La Table is among the lucky, in part because it had a well-positioned business prior to the pandemic. Annually it makes about $80 million from e-commerce sales (compared to $230 million in store revenue). It also started offering experiential services long before doing so became ubiquitous in retail. It offered cooking classes starting in 1996. By the time it filed for bankruptcy, cooking classes accounted for $35 million in revenue. 

Sur La Table had to suspend that business as the pandemic took hold in the U.S., but it is the sort of revenue stream that is poised to do well in a future where physical stores are always in search of new reasons to justify their existence and earn revenue. 

The Sur La Table that Marquee and CSC Generation take over is slimmer, having earmarked 50 stores for closure in bankruptcy. That was likely a needed correction, after its footprint outgrew its shrinking foot traffic. It also suffered from capital costs, a decline in home meal-making (which the pandemic has helped reversed, at least temporarily) and executive turnover. 

And so Sur La Table joins a growing group of retail brands, some with a physical footprint left and some without, that have been snapped in up in bankruptcy from IP-specialists. Authentic Brands, with its investor and partner Simon Property Group, the mall operator, just this week bought Brooks Brothers and Lucky Brands.

Marquee has been similarly opportunistic, picking up, for example, the BCBG Max Azria brand after the fashion seller and retailer filed for bankruptcy in 2017.

The strategy allows companies like Marquee and Authentic Brands (both of which are private equity backed) to suck up brand property at a steep discount, given the massive time and money investment it takes to build a brand from scratch. They can also defray the expense and and risk in making products and running stores by shunting those tasks off to operating partners.

CSC Generation, meanwhile, is a more complicated and interesting animal, being part tech company, part retailer, part consumer finance provider. CSC Generation also owns the Bon-Ton intellectual property and was reportedly mulling a bid for Pier 1 earlier this year that would have kept open a pared-down version of the home goods retailer. 

Along with Bon-Ton, it owns One Kings Lane, the DirectBuy savings club as well as a product leasing platform for consumers. CSC CEO Justin Yoshimura told Retail Dive in 2018 that he thought CSC could one day be a "multibillion-dollar" company" through acquisitions and an ambitious plan to become a kind of anti-Amazon retail platform.