Bed Bath & Beyond, Inc. · NYSE:BBBY
Bed Bath & Beyond — Q4 FY2020 Earnings Presentation
41 slides from Bed Bath & Beyond's earnings presentation, Apr 14, 2021
Slide 1: Bed Bath & Beyond, April 14, 2021
BED BATH & BEYOND April 14, 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 1) FY2020 Recap, Q4 Highlights & FY2021 Outlook 2) Q4 Business & Financial Results 3) Commercial Update 4) Operations Update 5) Appendix
Slide 4: FY2020 recap, Q4 highlights & FY2021 outlook
FY2020 recap Q4 highlights & FY2021 outlook
Slide 5: FY2020 accomplishments: associates, customers, digital, financial performance
BED BATH & BEYOND 5 Cared for our Associates, Customers & Communities ▪ Launched Comprehensive Store Safety Plan to protect our 38,000 associates and 37mn customers ▪ Delivered $10mn Bringing Home Everywhere donation program to support communities in need Unlocked our Digital-First, Omni-Always Pote
Slide 6: Consistently Executing on Transformation Strategy
BED BATH & BEYOND 6 Consistently Executing on Transformation Strategy ✓ 3rd Consecutive Quarter of Comp Sales Growth • +4% Total Enterprise • +6% Bed Bath & Beyond (BBB) banner1 ✓ Digital comp sales drive quarterly performance • +86% Total Enterprise; +99% BBB banner1 • 3.1mn new digital customers;
Slide 7: Reaffirming Full-Year Outlook
BED BATH & BEYOND 7 Reaffirming Full-Year Outlook ➢ FY21 Q1 sales will be non-comparable due to COVID-related store closures in FY 20 Q1. ➢ Excluding impact from divested businesses in both periods, sales of Core Go-Forward banners1 expected to be much higher by approximately +65 - 70% vs FY 20 Q1.
Slide 8: Fiscal 2021 Key Strategic Initiatives
BED BATH & BEYOND 8 Fiscal 2021 Key Strategic Initiatives • Launch at least 8 Owned Brands • Introduce new digital services • Upgrade and remodel Bed Bath & Beyond banner stores • Modernize technology platforms and reinvent supply chain operations • Further strengthen buybuy BABY and Harmon Face Val
Slide 9: Q4 business & financial results
Q4 business & financial results BED BATHS BEYOND
Slide 10: Third consecutive quarter of comp sales growth
BED BATH & BEYOND 10 Total Enterprise Comp +4% vs LY BBB Banner Comp Adj. EBITDA Margin Total Enterprise Digital Comp +86% vs LY Third Consecutive Quarter of Comp Sales Growth Consistent Gross Margin & EBITDA Margin Growth +6% vs LY BBB Banner Digital Comp Adj. Gross Margin [32.4%] 6.4% FY20 Q4 FY20
Slide 11: Positive cash flow, strengthened balance sheet, return of capital
BED BATH & BEYOND 11 Positive Cash Flow Generation Balance Sheet Strengthened / Return of Capital to Shareholders (1) Free Cash Flow is a non-GAAP financial measure. Free Cash Flow of $62mn includes cash flow provided from operations of $76mn less cash flow used in investing of $14mn, inclusive of $
Slide 12: Q4 financial highlights
BED BATH & BEYOND 12 Positive Cash Flow Generation Consistent Comparable Sales Growth Adj. Gross Margin & Adj. EBITDA Stronger Capital Structure ✓20 bps increase in Adj. Gross Margin vs LY, led by optimized markdowns / product promo and product mix, partially offset by channel mix and substantial in
Slide 13: Q4 FY2020 vs FY2019 results table
BED BATH & BEYOND 13 FY2019 Q4 FY2020 Q4 Diff Net Sales $3,107mn $2,619mn (16%) Total Enterprise Comp Sales +4% Bed Bath & Beyond Banner Comp Sales 1 +6% Adj. Gross Margin 32.6% 32.8% +20bps Adj. SG&A $953mn $763mn ($190mn) Adj. Net Income $47mn $47mn $0 Adj. EBITDA $148mn $168mn +13% Adj. EBITDA Ma
Slide 14: Q4 comps and digital comps
BED BATH & BEYOND 14 Q4 Total Enterprise Comps 4% Bed Bath & Beyond Banner 6% Digital Comps 86% Bed Bath & Beyond Digital Comps 99% • 3rd consecutive quarter of comparable sales growth led by strong digital comp sales in both Total Enterprise and Bed Bath & Beyond (BBB) banner1 offsetting sales decl
Slide 15: Net sales to comparable sales bridge
BED BATH & BEYOND 15 • Total Enterprise Comparable sales growth +4% • As expected, Total Enterprise Net Sales declined -16% reflecting: ▪ Approx. -12% unfavorable impact from non-core banner divestitures ▪ Excluding impact from divestitures, Core banner1 Net Sales declined approx. -3%, ▪ Approx. -8%
Slide 16: Gross margin bridge
BED BATH & BEYOND 16 • Adj. Gross Margin of 32.8% vs 32.6% LY, driven primarily by: ‐ Optimization of promotion & markdowns ‐ Favorable product mix ‐ Leverage of distribution and fulfillment costs ‐ Partially offset by higher digital channel mix, including substantial industry-wide freight rate incr
Slide 17: Cash flow and total cash balance
BED BATH & BEYOND 17 (1) Cash Flow from Investing includes $52mn related to sale of Cost Plus World Market (non-core asset); inclusive of $66mn of CAPEX. (2) Free Cash Flow is a non-GAAP financial measure. Free Cash Flow of $62mn includes cash flow provided from operations of $76mn less cash flow us
Slide 18: Positive net cash position and gross debt
BED BATH & BEYOND 18 $0.2bn $0.2bn $0.2bn $1.9bn $1.5bn $0.2bn FY20 Q4 Gross Debt Balance ex Op Leases1 FY20 Q4 – positive net cash position FY20 Q4 Net Cash Balance FY20 Q4 Cash Balance Cash & Investments $1.2bn • Positive net cash position of $0.2bn, with $1.4bn cash & cash equivalents balance, le
Slide 19: Capital allocation principles
BED BATH & BEYOND 19 Capital Allocation Principles ✓ Investing for growth and transformation ✓ Ensuring financial resilience ✓ Returning cash to shareholders FY 2020 Share Repurchase Activity ➢ $375mn in Accelerated Share Repurchase Programs • ~16mn shares repurchased, representing 13% of shares out
Slide 20: Commercial update
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Slide 21: Fourth quarter and full-year digital highlights
BED BATH & BEYOND 21 Fourth Quarter Digital Highlights • +86% Total Enterprise digital comp sales growth in FY20 Q4; 4th consecutive quarter of >75% growth • 3.1mn new digital customers, +96% FY19 Q4 • 310mn visits to our digital channels (up >50%), including 162mn unique visitors; +30% increase in
Slide 22: Store refreshes across Bed Bath & Beyond
BED BATH & BEYOND 22 • Store refreshes across the Bed Bath & Beyond chain create a welcoming and inspirational environment and include: ▪ Resetting merchandise assortment by room, instead of category, to make it easier to shop and find products ▪ More open aisle space and better site lines ▪ New sto
Slide 23: Bed Bath & Beyond banner and top 5 destination categories
BED BATH & BEYOND 23 • Solid comp sales growth of +6%, led by strong digital growth +99% and higher sales in Top 5 destination categories • +12% comp sales growth in Top 5 destination categories (combined), representing ~2/3 of Bed Bath & Beyond banner sales (1) Bed Bath & Beyond is among the Compan
Slide 24: Owned Brands launch plans
BED BATH & BEYOND 24 • Plans to introduce at least 8 new Owned Brands in FY21, with 6 launches in first six months, including 3 in FY21 Q1 • Assortment will include 1000’s of new products across key destination categories including bed, bath, kitchen & dining, storage & organization, and home décor
Slide 25: Owned Brands: bedding
COMMERICAL UPDATE everyday bedding and bath essentials, from the experts in cozy nestuell everyday comfort the juggler (40-55) basic | bedding ~ - < as the nester (55-70) ‘ top of the creative 2) 8-40)
Slide 26: Owned Brands: bath
COMMERICAL UPDATE spa-inspired bath essentials designed for your home customer key categories | categories segment haven Escape the noise the juggler shower ee curtains & liners bath furniture NO the creative (18-40) bath soove &org BED BATH & BEYOND
Slide 27: Owned Brands: home essentials
COMMERICAL UPDATE hard-working home essentials at a great value ; Simpl if bedding (65-70) bath (18-40) dining thecreative organization
Slide 28: buybuy BABY performance
BED BATH & BEYOND 28 • >$1bn in net sales in FY20 • +52% growth in digital in FY20 Q4; returning to positive comp sales growth • 0.6mn new online customers in FY20 Q4; 2.5mn new online customers in FY20, +45% • 51mn visits to digital channels, >+40%, including 24mn unique visitors; conversion rate +
Slide 29: buybuy BABY brand and marketing approach
BED BATH & BEYOND drive trial and win at the point of decision drive brand love (desire) and create loyalty beyond reason delight customers with our brand & product experience to drive loyalty We build trust with parents by supporting them with what they need next, so families can celebrate every mi
Slide 30: Operations update
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Slide 31: Store remodel plans
BED BATH & BEYOND 31 • Proof of concept store remodels completed in Houston market during February 2021 • Plans to remodel approx. 130 to 150 stores (across US/Canada) in FY 2021, including 26 stores during Q1 • ~$250mn in expected CAPEX investments over the next 3 years to remodel approximately 450
Slide 32: Technology transformation: current vs transformed
BED BATH & BEYOND 32 Flexibility, agility and scalability to meet business needs Increased digital capabilities More efficient technology operations Speed to market Shift spend towards innovation Improved return on technology investment Infrastructure Current ▪ Siloed in systems ▪ Poor quality of da
Slide 33: Q4 total enterprise summary
Q4 total enterprise summary
Slide 34: Non-GAAP footnotes
BED BATH & BEYOND 34 (1) Free Cash Flow is a non-GAAP financial measure. Free Cash Flow of $62mn includes cash flow provided from operations of $76mn less cash flow used in investing of $14mn, inclusive of $66mn of CAPEX. Note: Adj. EBITDA, and adj. gross margin are non-GAAP financial measures. For
Slide 35: Summary of strategy and investment case
BED BATH & BEYOND 35 Digital-first, omni-always strategy building foundation for long-term sustainable growth2 Authority in Home, Baby, Beauty & Wellness markets1 Strong balance sheet with positive cash flow generation and gross debt reductions5 Initiatives in place to drive customer loyalty with ma
Slide 36: April 13, 2021
36BED BATH & BEYOND APRIL 13, 2021
Slide 37: Quarterly net sales: reported and Core Go-Forward
BED BATH & BEYOND 37 • 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 providing this additional transparency to help analysts and
Slide 38: Fiscal 2020 Q4 net income bridge
APPENDIX fiscal 2020 Q4 net income bridge — non-gaap reconciliation* Gross Profit Gross margin Restructuring and transformation initiative expenses (Loss) earnings before (benefit) provision for income taxes ‘Tax (benefit) provision Effective tax rate ‘Net income (loss) Net earnings per share - Dilu
Slide 39: Fiscal 2020 Q4 EBITDA reconciliation
APPENDIX fiscal 2020 Q4 reconciliation of net income (loss) to EBITDA and adjusted EBITDA* Three Months Ended February 27, 2021 Excluding Loss on sale- leaseback, Restructuring including and Loss on Sale of transaction ‘Transformation Impairment Total income Reported Businesses fees Expenses charges
Slide 40: Fiscal 2019 Q4 net income bridge
APPENDIX fiscal 2019 Q4 net income bridge — non-gaap reconciliation* Gross Profit, Gross margin (Loss) earnings before (benefit) provision for income taxes ‘Tax (benefit) provision Effective tax rate Net (loss) income Net (loss) earnings per share - Diluted Weighted average shares outstanding- Basic
Slide 41: Fiscal 2019 Q4 EBITDA reconciliation
APPENDIX fiscal 2019 Q4 reconciliation of net income (loss) to EBITDA and adjusted EBITDA* Three Months Ended February 29, 2020 Excluding Loss on sale- leaseback, Restructuring including and Loss on Sale of transaction Transformation —_ Impairment Total income Reported Businesses fees Expenses Charg