Bed Bath & Beyond, Inc. · NYSE:BBBY
Bed Bath & Beyond — Q1 2020 Earnings Presentation
41 slides from Bed Bath & Beyond's earnings presentation, Jul 8, 2020
Slide 1: Fiscal 2020 Q1 Results
July 8, 2020 Fiscal 2020 Q1 Results (March 1st — May 30*) BED BATH & BEYONID
Slide 2: Forward-looking statements
This presentation contains forward-looking statements, including, but not limited to, the Company’s progress and anticipated progress towards its long-term objectives and the success of its plans in response to the novel coronavirus (COVID-19), as well as the status of its future liquidity and finan
Slide 3: Presenters
Mark Tritton Gustavo Arnal President & CEO CFO & Treasurer John Hartmann Joe Hartsig COO; President, buybuy BABY CMO; President, Harmon Stores Inc. BED BATH & BEYOND 3
Slide 4: Agenda
1) COVID-19 Response / Strategic Update 2) FY 2020 Q1 Results (March 1st – May 30th) 3) Operations Update 4) Commercial Update 5) Q&A BED BATH & BEYOND 4
Slide 5: COVID-19 response
COVID-19 response
Slide 6: COVID-19 Response
COVID-19 RESPONSE Strengthen Liquidity Adjust Control Operational Manage Inventory Re-Prioritize CAPEX Capital Allocation Expenses Levels • Executed $850mn • Suspended prior • Furloughed majority • Proactively reduced / • Postponed three-year secured plans to spend up of store associates canceled or
Slide 7: Protecting Associates and Customers
COVID-19 RESPONSE Protecting Associates and Customers During Q1 (March 1 – May 30): • Closed all retail banner stores on March 23rd across the US and Canada excluding most buybuy BABY and Harmon Face Values stores • Majority of stores remained closed for the rest of FY20 Q1 Enhancing Omni-Fulfillmen
Slide 8: COVID-19 Response
COVID-19 RESPONSE BED BATH & BEYOND 8
Slide 9: Post Q1 store reopening
COVID-19 RESPONSE Post Q1 (June 1- July 8): • Nearly all stores open • Favorable response to store re-openings; Digital demand remains strong Early June Mid-June Mid-July % of Stores Open to the Public : >60% >80% ~100% Open to Curbside: ~93% ~95% ~100% BED BATH & BEYOND 9
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Slide 11: Strategic Update: new leadership
STRATEGIC UPDATE ▪ Former EVP and Chief Merchandising Officer at Target Corporation Mark J. Tritton ▪ 30+ years of experience in end-to-end retail industry experience President and Chief Executive Officer ▪ Previous experience at Nordstrom, Inc., Timberland LLC and Nike, Inc. ▪ Currently serves on t
Slide 12: Strategic Update
STRATEGIC UPDATE BED BATH & BEYOND 12
Slide 13: Strategic Update
STRATEGIC UPDATE • Reduce cost of goods and drive supply chain transformation to address current gross margin pressures related to the substantial shift of sales from store to digital channels • Close ~200 mostly Bed Bath & Beyond stores over the next two years under Store Network Optimization Proje
Slide 14: Q1 2020 Results
Q1 2020 results (March 1st — May 30+») BED BATHS BEYOND
Slide 15: Q1 2020 Results
Q1 2020 RESULTS • Fiscal Q1 spanned the most critical months to date of the COVID-19 pandemic – March, April and May • Maintained strong liquidity and financial flexibility driven by proactive actions to control cash burn • Strong balance sheet, ending quarter with ~$1.2bn in cash and investments; P
Slide 16: Q1 2020 Results: liquidity and cash bridge
Q1 2020 RESULTS • Started FY20 Q1 with a healthy cash position FY19 Q4 vs FY20 Q1 – liquidity & cash activity bridge (~$1.4bn as of year-end FY19) $1.6bn • Drew down available $236mn from unsecured $1.8bn revolving credit facility (March) $0.2bn $236mn • Actively controlled monthly cash burn $0.6bn
Slide 17: Q1 2020 Results: financial summary
Q1 2020 RESULTS Three Months Ended • Net sales impacted by temporary store closures during COVID-19 pandemic, decreased 49% vs. FY19 Q1 (in millions, except per share data) Q1 2020 Q1 2019 Diff • Gross Margin impacted by channel and product mix related to substantial shift in sales to digital channe
Slide 18: Q1 2020 Results: sales by channel
Q1 2020 RESULTS • Explosive growth in Digital sales, ~82%; Sales by Channel Digital Sales Growth by Month Digital sales growth each month, supported by rollout of BOPIS and Curbside Pickup fulfillment services +>100% Stores, ~1/3 • COVID-19 events and temporary store closures for Digital, majority o
Slide 19: Gross margin bridge
Q1 2020 RESULTS • Gross Margin impacted by channel and product mix FY19 Q1 vs FY20 Q1 – gross margin bridge created by the COVID moment related to substantial shift in sales to digital channels, 26.7% vs 34.5% in FY19 Q1 34.5% - Digital sales ~2/3 of total net sales - Higher direct-to-customer shipp
Slide 20: Adjusted SG&A bridge
Q1 2020 RESULTS • SG&A expense decreased $169 million or 19% vs FY19 Q1, FY19 Q1 vs FY20 Q1 – adj. sg&a bridge driven by cost reduction interventions and COVID-19 impacts. $846mn • Adjusted SG&A expense declined ~$123mn (~15%) to $723mn vs $846mn in FY 19 Q1 $723mn ‐ Initiated cost reduction interve
Slide 21: Operations update
ions operat update BED BATHS BEYOND
Slide 22: Operations Update: fulfillment and BOPIS
OPERATIONS UPDATE • Converted ~25% of Bed Bath & Beyond and buybuy BABY stores in the US/Canada into regional fulfillment centers to assign orders locally and deliver quickly ‐ Nearly doubled digital fulfillment capacity ‐ Enabled online orders to ship in 2 days or less (average) • Accelerated launc
Slide 23: Operations Update: store network optimization
OPERATIONS UPDATE • Deep analysis of both individual store and • Plan to close ~200 mostly Bed Bath & Beyond market data stores over the next 2 yrs. • Right-size real estate portfolio to reduce • Expect unfavorable impact to topline; upside redundant stores and support digital-first opportunity on E
Slide 24: Operations Update: end-to-end supply chain
OPERATIONS UPDATE Product / Assortment End to End Supply Chain Stores Customers Vendors Product / Assortment BED BATH & BEYOND 24
Slide 25: Operations Update: buybuy BABY
OPERATIONS UPDATE • BABY teams excelled in creating a positive customer experience and providing the essential items customers need to care for their families • Quickly shifted marketing approach to support the growing online demand • Led the Company’s pilot and standup of BOPIS / Curbside Pickup se
Slide 26: Commercial update
commercial update BED BATHS BEYOND
Slide 27: Commercial Update
COMMERCIAL UPDATE • Partnered with vendors to increase and expedite products that met customers’ changing needs • Re-routed product from stores to web warehouses, and converted stores into regional fulfillment centers in order to support web orders • Adjusted marketing spend that was focused on driv
Slide 28: Commercial Update: digital marketing
COMMERCIAL UPDATE • Increased investments in search, paid social and affiliate marketing to reach new customers online • Focused attention on website, modernizing the look, feel and voice to align more closely with new branding • Built out more robust reporting to identify inventory challenges, and
Slide 29: Commercial Update: category priorities
COMMERICAL UPDATE Start in Destination categories (Bed, Bath, Kitchen) with Category Experience Resets Create an Owned Brand Portfolio that drives differentiation, consumer delight and value Fund growth through assortment optimization reviews and supplier profitability actions across omni-channel po
Slide 30: Commercial Update: price and value
COMMERICAL UPDATE Deliver on price/value equation Leverage sales pattern analytics to optimize for margin opportunities Keep select digital assortment competitively priced and on strategy Develop end-to-end processes, analytics and tools to optimize investments and drive profitable sales-driving pro
Slide 31: BED BATH & BEYOND 31
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Slide 32: Wrap Up
WRAP UP 2 Strong liquidity position including recent initiatives around FY 2020 cash preservation and new ABL Facility 1 3 5 Transformation underway with cost interventions and investments in capabilities Strategic growth agenda Leading home furnishings to re-establish authority in Home space; that
Slide 33: Q&A
q&a BED BATH & BEYOND 33
Slide 34: July 8, 2020
BED BATH & BEYOND JULY 8, 2020 34
Slide 35: Appendix
APPENDIX (in thousands, except for share data) (unaudited) * The Company is presenting certain non-GAAP financial measures for its fiscal 2020 first quarter. In order for investors to be able to more easily compare the Company’s performance across periods, the Company has included comparable reconci
Slide 36: Appendix
APPENDIX (in thousands, except for share data) (unaudited) * The Company is presenting certain non-GAAP financial measures for its fiscal 2020 first quarter. In order for investors to be able to more easily compare the Company’s performance across periods, the Company has included comparable reconci
Slide 37: Appendix
APPENDIX (in thousands, except for share data) (unaudited) * The Company is presenting certain non-GAAP financial measures for its fiscal 2020 first quarter. In order for investors to be able to more easily compare the Company’s performance across periods, the Company has included comparable reconci
Slide 38: Appendix
APPENDIX (in thousands, except for share data) (unaudited) * The Company is presenting certain non-GAAP financial measures for its fiscal 2020 first quarter. In order for investors to be able to more easily compare the Company’s performance across periods, the Company has included comparable reconci
Slide 39: Appendix
APPENDIX (in thousands, except for share data) (unaudited) * The Company is presenting certain non-GAAP financial measures for its fiscal 2020 first quarter. In order for investors to be able to more easily compare the Company’s performance across periods, the Company has included comparable reconci
Slide 40: Appendix
APPENDIX (in thousands, except for share data) (unaudited) * The Company is presenting certain non-GAAP financial measures for its fiscal 2020 first quarter. In order for investors to be able to more easily compare the Company’s performance across periods, the Company has included comparable reconci
Slide 41: Home Is Everything
> Home Is Everythin . things we love. It's our home! Bed Bath & Beyond: Home is Everything.