Bed Bath & Beyond Inc. Q2 FY2025 earnings call

• Started in Oct 2024 with operational metrics like margin range 24%-26% and selling/marketing expense 13.5%-14.75%. Revenue of $282M was a surprise. Focus on patio business and Overstock brand revival. Secured a $5M upfront payment and long-term licensing agreement in Canada. Invested in Kirkland's (The Brand House Collective). Working to unlock value in tZERO, including converting tZERO ROP tokens, and exploring GrainChain value. Planning to build a Bitcoin reserve and exploring a contingent value right for the Medici portfolio.

Revenue for the quarter was $282 million. The patio business saw improved average orders, though it leads to slightly lower margin on a product level but contributes to gross dollars. The Overstock brand has shown daily, weekly, and monthly improvements, with better contribution margin. Overstock's newly launched categories like luxury store (selling designer handbags, shoes) and plans to expand into rug business, fine jewelry, etc., are contributing. Patio revenue year-over-year was down, but contribution margin was materially up. Overstock's revenue contribution is improving with a focus on a more affluent customer base.

• Expect continued growth over Q1 base in Q3, with similar order count possibly higher but AOV may be lower as patio mixes out. Comfortable with Q3 guideposts. Aim to tighten SG&A, target cash flow positivity from operations. Expect patio revenue growth in 2026 against 2025.

Actual results could differ materially from forward-looking statements. Risks outlined in Form 10-K and SEC filings, including macroeconomic factors like housing market and economy affecting retail business.

Q: Can you provide an update on the SKU rationalization efforts across Bed Bath & Beyond and expand on confidence in Overstock's affluent customer?

A: Alex Thomas said SKU rationalization heavy lifting is complete but ongoing. Marcus Lemonis discussed Overstock's research showing affluent customer profile (household income >$150k, credit score >700, age 45-75) and growth in designer handbags/shoes.

Q: On the tZERO front, can you compel them to go public?

A: Marcus Lemonis said they can compel in various ways but want mutual alignment on value creation, expecting tZERO ROP tokens to be converted and value unlocked.

Q: Is there anything else you can share on Beyond's ownership of larger assets besides tZERO?

A: Marcus Lemonis detailed ownership in tZERO (53% total equity), tZERO ROP (14% ownership), GrainChain (9% direct, convertible note), and ownership in other assets like Ripio, Voatz, etc.

Q: What did you learn from patio work this quarter and how it relates to other assortments?

A: Alex Thomas said they learned about SKU curation, engaging promos, and right assortment/price point for patio, looking to apply to other categories.

Q: Were patio sales up year-over-year, and is positive revenue growth a bogey for next year?

A: Marcus Lemonis said patio revenue year-over-year was down, but contribution margin was up. Expect positive revenue growth in 2026 against 2025.

Q: Why is the Bitcoin reserve the right thing to do, and how will it be built up?

A: Marcus Lemonis said cash from ops turning positive and as a technology blockchain company, they want to participate in Bitcoin, planning to deploy cash into reserve smartly.