BED BATH & BEYOND, INC. Q3 FY2024 earnings call

• Key focus areas identified were conversion, margin, and SG&A. - Gross margin improved due to strategic decisions to reduce promotional discounting. - SG&A saw a quarter-over-quarter reduction with a recent workforce reduction. - Emphasis on restoring core businesses, including revitalizing Overstock and Bed Bath & Beyond. - Discussion of partnerships with Kirkland's and potential opportunities with The Container Store. - Highlighted plans for data monetization and leveraging Bed Bath & Beyond's database. - Mentioned investments in technology and assets such as tZERO and GrainChain.

Revenue for the quarter was down year-over-year, primarily driven by the company's commitment to achieving profitability. Gross margin came in at 21.2% in Q3 2024, representing an 110 basis point improvement compared to Q2. This improvement was by design, with less promotional discounting. SG&A expenses for the quarter amounted to $45.2 million, showing a $1 million quarter-over-quarter improvement. Adjusted EBITDA was a loss of $32 million, an improvement from the $36 million loss in Q2. In terms of revenue contribution, the combined performance of Overstock and Bed Bath & Beyond led to the year-over-year decline, while gross margin contributed 21.2% of total revenue with the Q2-to-Q3 improvement. SG&A contributed $45.2 million to the overall financials with the goal of reducing to the low 40s.

The company expects material improvement in the bottom line for Q4 compared to Q4 of the previous year and Q3 of this year. Anticipates revenue, margin, and adjusted EBITDA to improve from Q3 to Q4. There is no specific timeline provided for medium-term targets, but it is expected that there will be a couple to a few quarters of improvement, with Q4 showing significant year-over-year and quarter-over-quarter improvements.

The geopolitical macro environment is expected to remain soft, which could impact assumptions. Uncertainty exists regarding fully bifurcating the product assortment between Overstock and Bed Bath & Beyond. Concerns about cash flow management and potential debt-related issues. Potential disruptions from technology and process inefficiencies that could affect conversion and margin performance.

Q: Can you talk about how many quarters it will take to reach medium-term targets?

A: We aren't giving a solid date, but we expect a couple to a few quarters. Q4 will show material improvement year-over-year and quarter-over-quarter.

Q: How is progress with tZERO being monitored?

A: Key performance indicators include getting technology right, securing the right special-purpose broker-dealer, reducing cash spend, and bringing on clients. Also, focusing on white-label solutions and alternative assets.

Q: What's the vision for the 5 stores Kirkland's is testing?

A: The goal is to bring back the iconic legacy of Bed Bath & Beyond. Looking at locations on the East Coast, like Jersey. Expect early 2025 for stores, with the first stores resembling the best execution of the past.