Bed Bath & Beyond Inc. Q4 FY2025 earnings call

• 2025 was about stabilizing and building the base; 2026 is about growing the base within a 3-pillar ecosystem architecture. - Over the last 8 quarters, consistent year-over-year EBITDA improvement and lower breakeven. In Q4 2025, revenue decline was due to housing market softness and eliminating negative contribution margin vendors/SKUs. Year-over-year revenue gap narrowed and adjusted EBITDA loss improved. - 2025 had meaningful gross profit margin improvement despite tariff headwinds, from better vendor negotiations, product mix, inventory controls, and operating structure. - 2026 objective is to advance margins towards 25%, midpoint of 24%-26% framework, with potential to break through 26% over time. - In 2026, targeting low- to mid-single-digit revenue growth. First quarter expects at least 30% year-over-year revenue growth and EBITDA improvement. Q2 expects to close Kirkland's transaction around April 1, with partial ownership and integration activity. Q3 expects execution of integration work and Q2 to flow through financials more meaningfully. Q4 expects positive top line growth and margin leverage with potential for profitability. - The 3 pillars are omnichannel (approx $1.5B annualized revenue with Kirkland's and potential $500M additional top line), protection advocacy, brokerage and financial solutions, and home services installation and maintenance infrastructure. - Proprietary loyalty and identity wrapper with BILT and broader home operating system with LifeChain on blockchain. - Accelerated implementation of modern technology including AI to drive revenue and reduce costs.

In Q4 2025, revenue declined 10% year-over-year, excluding Canada operations it was down 6%. AOV improved 7% due to improved assortment and sales mix into Overstock. Gross margin for Q4 was 24.6%, a 160 basis point improvement year-over-year. Full year gross margin improved by 390 basis points to 24.7%. Sales and marketing decreased by $15 million or improved efficiency by 350 basis points as a percent of revenue. G&A and tech expense decreased by $15 million year-over-year. Adjusted EBITDA loss in Q4 was $4 million, an 84% or $23 million improvement vs Q4 2024. Full year adjusted EBITDA loss was $31 million, a $113 million improvement vs 2024. Reported diluted EPS was a loss of $0.30 per share, an 82% or $1.36 improvement year-over-year. Cash and cash equivalents, restricted cash and inventory balance ended the quarter at $207 million. Full year cash used in operating activities improved by more than $118 million or 67%.

• Targeting low- to mid-single-digit revenue growth for full year 2026 based on current trends. - First quarter expects at least 30% year-over-year revenue growth and EBITDA improvement compared to Q1 2025. - Q2 expects to close Kirkland's transaction on or around April 1, with partial ownership and integration activity. - Q3 expects execution of integration work and Q2 to flow through financials more meaningfully, with positive top line growth and improved operating leverage, stretch objective to approach breakeven. - Q4 expects positive top line growth again and improved margin leverage with opportunity for profitability assuming integration milestones are achieved. - Margin objective for 2026 is to advance towards 25%, midpoint of 24%-26% framework.

Q: Steven Forbes asked about active customer base and orders per active customer.

A: Marcus Lemonis said trough is behind, growth in all cases, tempered on AOV due to mix change.

Q: Steven Forbes followed up on Pillar 2 and 3 interest.

A: Marcus Lemonis said to think differently about Bed Bath & Beyond, TAM in housing market is trillions, Pillar 3 has higher margins, middle section has explosive margins, operators are subject matter experts, consolidation in financial and data areas.

Q: Jonathan Matuszewski asked about Pillar 2 and 3 margin profile and CAC.

A: Marcus Lemonis said Pillar 3 has materially higher gross margin, middle section margins are explosive, CAC assessment is early with learnings needed.

Q: Bernard McTernan asked about Pillar 2 acquisition and services.

A: Marcus Lemonis said 2-funnel approach, acquisition provides instant integration, 12 months to full steam.

Q: Bernard McTernan asked about 2026 revenue growth inclusion of Kirkland.

A: Marcus Lemonis said low to mid-single digits is e-commerce only, Kirkland has similar growth.

Q: Thomas Forte asked about working with strategic partners vs owning assets.

A: Marcus Lemonis said Pillar 1 largely owned, Pillar 2 due to regulatory complexity and balance sheet risk is partnerships, Pillar 3 wants to own as much as possible for margins.

Q: Thomas Forte asked about home operating system.

A: Marcus Lemonis said home operating system has real estate ledger on blockchain, to be developed over 12 months and launched in 2027.

Q: Seth Sigman asked about top line improvement.

A: Marcus Lemonis said positive growth since January, low to mid-single digit, due to assortment cleanup, pricing, marketing, Q1 expects 3%-5% revenue improvement and 30% EBITDA margin improvement, Q2 same growth with margin pressure, Q3 and Q4 expect more growth and margin leverage.