Bed Bath & Beyond, Inc. · NYSE:BBBY
Bed Bath & Beyond — Q1 2021 Earnings Presentation
39 slides from Bed Bath & Beyond's earnings presentation, Jun 30, 2021
Slide 1: First Quarter Fiscal 2021 Earnings Presentation
BED BATH & BEYOND 1 Mark Tritton, President & Chief Executive Officer Gustavo Arnal, Executive Vice President, Chief Financial Officer First Quarter Fiscal 2021 Earnings Presentation June 30, 2021
Slide 2: Forward-looking statements
BED BATH & BEYOND 2 This presentation contains forward-looking statements within the meaning of Section 21 E of the Securities Exchange Act of 1934 including, but not limited to, the Company’s progress and anticipated progress towards its long-term objectives, as well as more generally the status of
Slide 3: Agenda
BED BATH & BEYOND 3 Q1’21 Results Q2’21 & FY 2021 Outlook Transformation Progress Appendix Agenda
Slide 4: Q1'21 Results
4BED BATH & BEYOND Q1’21 Results Q1’21 RESULTS
Slide 5: First Quarter Highlights
BED BATH & BEYOND 5 First Quarter Highlights 1Q’21 RESULTS Results within or above Company’s previously provided Q1’21 outlook Net Sales of $1.95 B Core Sales increased +73%, above guidance of +65-70% Comp Sales growth of +86% vs. Q1’20 and +3% versus Q1’19 Adjusted Gross Margin of 34.9%,
Slide 6: First Quarter Results – Sales & P&L
BED BATH & BEYOND 6 Net Sales $1.95 Billion [+49% vs. Q1’20] Adj. Gross Margin 34.9% [+820bps vs. Q1’20] [+40bps vs. Q1’19] Core Banner Growth +73% vs. Q1’20 Adj. EBITDA $86 Million Comp Sales +86% vs. Q1’20 [+3% vs. Q1’19] Adj. Diluted EPS $0.05 First Quarter Results – Sales & P&L 1Q’21 RESULTS 2 2
Slide 7: Total Net Sales to Comparable Sales – Q1'21 vs. Q1'20
BED BATH & BEYOND 7 1Q’21 RESULTS Total Net Sales to Comparable Sales – Q1’21 vs. Q1’20 • Total Net Sales growth of +49% includes: • planned reduction from non-core banner divestitures of -24% • Core banner net sales growth of +73% includes: • planned reduction from fleet optimization activity of -1
Slide 8: Total Net Sales to Comparable Sales – Q1'21 vs. Q1'19
BED BATH & BEYOND 8 1Q’21 RESULTS Total Net Sales to Comparable Sales – Q1’21 vs. Q1’19 -18% -24% -6% -9% 3% • Total Net Sales of -24% includes: • planned reduction from non-core banner divestitures of -18% • Core banner net sales of -6% includes: • planned reduction from fleet optimization activity
Slide 9: Key Drivers of Sales Growth
BED BATH & BEYOND 9 Q1’20* 66% Q1'19 20% Q1'18 18% Increased Digital Penetration 1Q’21 RESULTS Key Drivers of Sales Growth Core Sales vs Q1’20 Comp Sales vs. Q1’19 Total Enterprise +73% +3% Bed Bath & Beyond Banner +96% +3% Top 5 Destination Categories at Bed Bath & Beyond Banner Core Sales vs Q1’20
Slide 10: Gross Margin Bridge – Q1'20 to Q1'21
BED BATH & BEYOND 10 Q1'21 Gross Margin Q1'20 Gross Margin Product Mix Cost Savings / Leverage Channel Mix / DTC Shipping Expense 34.9% 26.7% 290bps 240bps 290bps 1Q’21 RESULTS Note: numbers may not add due to rounding Gross Margin Bridge – Q1’20 to Q1’21 Q1’21 total enterprise gross margin expansio
Slide 11: Strong Cash & Liquidity
BED BATH & BEYOND 11 Total Cash & Investments $1.2B Bonds $1.2B ABL $0.7B Strong Cash & Liquidity 1Q’21 RESULTS Total Liquidity of $1.9B Q4'20 Total Cash & Investments $1.4B Q1'21 Total Cash & Investments $1.2B Free Cash Flow -$0.1B Cash Flow used in Financing -$0.1B share repurchases $130M in Q1’21
Slide 12: Financial Outlook
12BED BATH & BEYOND FINANCIAL OUTLOOK
Slide 13: Second Quarter Fiscal 2021 Outlook
BED BATH & BEYOND 13 Note: Adj. gross margin, adj, EBITDA & adj. EPS are non-GAAP financial measures. For a reconciliation to comparable GAAP measures, see Appendix of this presentation. Key Considerations: July and August are important sales periods (i.e. Independence Day and Back-to-College) D
Slide 14: Full Year Fiscal 2021 Outlook
BED BATH & BEYOND 14 P&L FULL YEAR FISCAL 2021 CURRENT PRIOR CHANGE Sales $8.2 B - $8.4 B $8.0B - $8.2B Increased Comp Sales (Q2’21 – Q4’21) +low single-digit growth flat Increased Adjusted Gross Margin (as a percentage of sales) Approx. 35% Approx. 35% Reaffirmed Adjusted SG&A (as a percentage of s
Slide 15: Full Year Fiscal 2021 Outlook – Capital Allocation
BED BATH & BEYOND 15 CAPITAL ALLOCATION FULL YEAR FISCAL 2021 CURRENT PRIOR CHANGE CAPEX Approx. $400 M Approx. $400 M Reaffirmed Gross Debt-to-EBITDA Ratio Faster Improvement to <3.0x Faster Improvement to <3.0x Reaffirmed Share Repurchase $325 M $325 M Reaffirmed Weighted Average Share Count Appro
Slide 16: Portfolio & Financial Transformation
BED BATH & BEYOND 16 Portfolio & Financial Transformation FINANCIAL OUTLOOK 2019 2021 Net Sales of $11B Net Sales $8.2B to $8.4B [Core Net Sales of $9B] with +low single-digit comp. growth (Q2’21-Q4’21) Adj. Gross Margin approx. 33% Adj. Gross Margin approx. 35% Adj. EBITDA $465M [Core EBITDA $425M]
Slide 17: Transformation Update
17BED BATH & BEYOND TRANSFORMATION UPDATE
Slide 18: Launched Significant Transformation with pivot in 2020
BED BATH & BEYOND 18 Launched Significant TRANSFORMATION with pivot in 2020 TRANSFORMATION UPDATE
Slide 19: Key Strategic Initiatives
BED BATH & BEYOND 19 TRANSFORMATION UPDATE Key Strategic Initiatives 3-Year Strategic Plan Fiscal Year 2021 (Year 1) of Transformation Q1’21 Snapshot Digital-First, Omni-Always Stores as fulfillment hubs Omni-always platform Invest in key projects for enhanced capabilities Expanded same-day
Slide 20: Digital Transformation
BED BATH & BEYOND TRANSFORMATION UPDATE Digital Transformation Three Pillars of Transformation ELEVATE EXPERIENCE: Overhauled websites with new look, reduced steps to checkout and AI-powered search UNLOCK OMNI-ALWAYS: launched BOPIS & curbside pickup services TRANSFORM TO DIGITAL FIRST: Upgraded too
Slide 21: Store Remodels
BED BATH & BEYOND 21 • Initiated 26 store remodels (after refreshing most stores LY) • Initial output of sales exceed estimates Q1’21 Progress • Expecting to remodel approx. 130 to 150 stores across US & CAN) FY 2021 TRANSFORMATION UPDATE Store Remodels AFTER BEFORE
Slide 22: Store Fleet Optimization
BED BATH & BEYOND 22 TRANSFORMATION UPDATE Store Fleet Optimization • 16 store closures during the quarter • Total of 160 store closures through Q1’21 Q1’21 Progress • Expecting to close approx. 200 stores through FY21FY 2021 Continuing to position our network for the future: Disciplined managemen
Slide 23: Owned Brands Assortment Progress
BED BATH & BEYOND 23 TRANSFORMATION UPDATE Escape the noise Launched March 2021 Assortment Progress: Launched 3 New Owned Brands in Q1’21 everyday comfort Launched April 2021 Launched May 2021 Home starts here
Slide 24: Owned Brands Sales Penetration
BED BATH & BEYOND 24 FY 2020 approx. 10% Q1’21 achieved high-teens percentage FY 2021 run rate of 20% FY 2023 GOAL OF 30% • Ahead of schedule to reach our Full Fiscal Year 2021 Owned Brands penetration goal Owned Brands Sales Penetration
Slide 25: Launching Next New Owned Brands Ahead of Schedule
BED BATH & BEYOND 25 TRANSFORMATION UPDATE Launching Next 3 New Owned Brands Ahead of Schedule Bring your story to life Launched June 2021 Start with food. End with love. Launched June 2021 Launching July 2021 Solutions for a well-kept home
Slide 26: Continued Growth in buybuy Baby Banner
BED BATH & BEYOND 26 Positive Net Sales growth vs. Q1’20 greater than 20% Digital penetration driven by BOPIS orders55% OPERATIONS UPDATE Continued Growth in buybuy Baby Banner #1 specialty baby retailer in markets with a presence #5 retailer in baby registry nationally
Slide 27: Supply Chain and Technology Delivering Value
BED BATH & BEYOND 27 T E C H N O L O G Y FUTURE STATE S U P P L Y C H A IN Q1’21 PROGRESS OPERATIONS UPDATE Supply Chain and Technology Delivering Value Increased digital capabilities Flexibility, agility and scalability Speed to market More efficient technology operations Shift spend towa
Slide 28: Unlocking a Virtuous Cycle to Drive Sustainable Value Creation
BED BATH & BEYOND 28 Unlocking a Virtuous Cycle to Drive Sustainable Value Creation TRANSFORMATION UPDATE
Slide 29: Building a Positive Track Record – Comp Sales
BED BATH & BEYOND 29 -2% -2% -0.3% -1% -1% -1% -2% -1% -7% -8% -6% 3% vs. Q1’19 6% 2% 4% Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 N/A* TRANSFORMATION UPDATE *Company did not disclose comp sales due to COVI
Slide 30: Building a Positive Track Record – Gross Margin
BED BATH & BEYOND 30 36.0% 34.1% 33.3% 33.6% 35.0% 38.0% FY 2017 FY 2018 FY 2019 FY 2020 FY 2021E FY 2022E FY 2023E Continued Gross Margin Expansion TRANSFORMATION UPDATE Building a Positive Track Record of Performance – Gross Margin
Slide 31: Shareholder Value Creation Through Capital Deployment
BED BATH & BEYOND 31 $225M $150M $130M $375M $130M in Q1’21 total of $325M $- $50 $100 $150 $200 $250 $300 $350 $400 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 FY 2020 FY 2021E FY 2022E FY 2023E Accelerated Share Repurchase Program Leverage of <3.0x PMALL Divesture One Kings Lane Divesture approx. $1 b
Slide 32: Investing in What We Believe In
BED BATH & BEYOND 32 WHO WE ARE Our Commitments People: Become a Top 10 Retail Employer by 2030 by creating an equitable, inclusive work environment where all our people feel at home and can thrive Community: Donate $1 billion in products, 2 million volunteer hours by 2030 to help provide the sa
Slide 33: Investment Thesis
BED BATH & BEYOND 33 WHO WE ARE Turnaround story with significant potential for sustainable financial results Sales acceleration through assortment curation, the addition of owned brands and a digital-first mindset Enhancing gross margin & EBITDA through product mix, pricing and operational ef
Slide 34: Appendix
34BED BATH & BEYOND APPENDIX
Slide 35: Quarterly Summary of FY2019 & FY2020 Net Sales
BED BATH & BEYOND 35 APPENDIX Quarterly Summary of FY2019 & FY2020 Net Sales • The following table shows a quarterly summary of the Company’s fiscal 2019 and 2020 net sales on both a Reported GAAP basis and on a Core Go-Forward basis, which excludes sales from divested banners. • The Company is prov
Slide 36: Non-GAAP definitions and notes
BED BATH & BEYOND 36 1 The Company notes that first quarter growth rates in fiscal 2021 are not fully comparable due to last year’s extended store closures related to the COVID-19 pandemic. Therefore, Comparable Sales Growth for the three months ended May 29, 2021 has been calculated by adjusting Co
Slide 37: Q1'21 Non-GAAP Reconciliation
BED BATH & BEYOND 37 APPENDIX Q1’21 Non-GAAP Reconciliation
Slide 38: Q1'20 Non-GAAP Reconciliation
BED BATH & BEYOND 38 APPENDIX Q1’20 Non-GAAP Reconciliation
Slide 39: First Quarter Fiscal 2021 – Closing
BED BATH & BEYOND 39 Mark Tritton, President & Chief Executive Officer Gustavo Arnal, Executive Vice President, Chief Financial Officer First Quarter Fiscal 2021 Earnings Presentation June 30, 2021