Bed Bath & Beyond, Inc. · NYSE:BBBY
Bed Bath & Beyond — Q2 2021 Earnings Presentation
38 slides from Bed Bath & Beyond's earnings presentation, Sep 30, 2021
Slide 1: Second Quarter Fiscal 2021 Earnings Presentation
BED BATH & BEYOND 1 Mark Tritton, President & Chief Executive Officer Gustavo Arnal, Executive Vice President, Chief Financial Officer Second Quarter Fiscal 2021 Earnings Presentation September 30, 2021 (Period Ending August 28, 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 Agenda Q2’21 Results (Jun-Jul-Aug) Q3’21 & FY 2021 Outlook Transformation Update Appendix
Slide 4: Q2'21 Results
4BED BATH & BEYOND Q2’21 RESULTS
Slide 5: Second Quarter Highlights
BED BATH & BEYOND 5 Second Quarter Highlights Net Sales of $1.985B reflecting comp1 sales decrease of -1% Bed Bath & Beyond banner comp1 decline of -4% as a result of deceleration and lower- than-expected traffic in August (largest month of Q2) buybuy BABY positive comp1 of +mid-teens percent
Slide 6: Second Quarter Results – Key Financial Metrics
BED BATH & BEYOND 6 Total Comp1 Sales -1% vs. Q2’20 Net Sales $1.985B Adj. Gross Margin2 34.0% Adj. EBITDA2 $85M Op. Cash Flow $75M Second Quarter Results – Key Financial Metrics Note: The Company’s four Core banners include Bed Bath & Beyond, buybuy BABY, Harmon Face Values and Decorist. BBB -4% vs
Slide 7: Net Sales to Comparable Sales vs. LY
BED BATH & BEYOND 7 Net Sales to Comparable Sales vs. LY (Q2’21 vs. Q2’20) • Total Net Sales decline of -26% includes: • planned reduction from non-core banner divestitures of -15% • Core banner net sales decline of -11% includes: • planned reduction from fleet optimization activity of -10% • Compar
Slide 8: Key Sales Drivers by Banner
BED BATH & BEYOND 8 Q2’20 32% Q2’19 18% Q2’18 16% Q2’21 34% Continued Digital Penetration Key Sales Drivers By Banner Comp Sales1 vs. Q2’20 Total Group -1% Bed Bath & Beyond Banner -4% buybuy BABY Banner +high-teens Top 5 Destination Categories at Bed Bath & Beyond Banner Comp Sales1 vs. Q2’20 % of
Slide 9: Gross Margin Bridge – Q2'20 to Q2'21
BED BATH & BEYOND 9 Channel Mix Q2'21 Gross Margin Q2'20 Gross Margin Product Mix Cost Savings / Leverage Freight 34.0% 35.9% +130 bps +40 bps 0 bps Note: numbers may not add due to rounding Gross Margin Bridge – Q2’20 to Q2’21 • Q2’21 total enterprise gross margin of 34.0% primarily driven by highe
Slide 10: Strong Cash & Liquidity
BED BATH & BEYOND 10 Total Cash & Investments $1.1B Bonds $1.2B Strong Cash & Liquidity Total Liquidity3 of $2B Q1'21 Total Cash & Investments $1.2B Q2'21 Total Cash & Investments $1.1B Operating Cash Flow $0.1B Capital Expenditures -$0.1B Investing Cash Flow -$0.1B ABL $0.9B Generated $75M in Opera
Slide 11: Financial Outlook
11BED BATH & BEYOND FINANCIAL OUTLOOK
Slide 12: Third Quarter Fiscal 2021 Outlook
BED BATH & BEYOND 12 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: November is an important sales month (i.e. Thanksgiving/Holidays) Depreciation & Amortiza
Slide 13: Revising Full Year Fiscal 2021 Outlook
BED BATH & BEYOND 13 P&L FULL YEAR FISCAL 2021 CURRENT PRIOR Sales $8.1B - $8.3B $8.2B - $8.4B Comp Sales (Q2’21 – Q4’21) flat to slightly positive +low single-digit growth Adjusted Gross Margin (as a percentage of sales) Approx. 34.0% - 35.0% Approx. 35% Adjusted SG&A (as a percentage of sales) App
Slide 14: Full Year Fiscal 2021 Outlook – Capital Allocation
BED BATH & BEYOND 14 CAPITAL ALLOCATION FULL YEAR FISCAL 2021 CAPEX Approx. $400M Gross Debt-to-EBITDA Ratio4 Faster Improvement to approx. 3.0x Share Repurchase $325M Weighted Average Share Count Approx. 105M Full Year Fiscal 2021 Outlook – Capital Allocation FINANCIAL OUTLOOK
Slide 15: Portfolio & Financial Transformation
BED BATH & BEYOND 15 2019 2021 Net Sales of $11B Net Sales $8.1B to $8.3B[Core Net Sales of $9B] Adj. Gross Margin approx. 33% Adj. Gross Margin approx. 34.0% - 35.0% Adj. EBITDA $465M [Core EBITDA $425M] Adj. EBITDA $425M to $465M EPS $0.46 EPS $0.70 to $1.10 Approx. 126 million Approx. 100 million
Slide 16: Transformation Update
16BED BATH & BEYOND TRANSFORMATION UPDATE
Slide 17: Launched Significant Transformation with pivot in 2020
BED BATH & BEYOND 17 Launched Significant TRANSFORMATION with pivot in 2020 TRANSFORMATION UPDATE
Slide 18: 3-Year Strategic Plan: Fiscal 2021 Year 1 of Transformation
BED BATH & BEYOND 18 3-Year Strategic Plan Fiscal Year 2021 (Year 1) of Transformation Q2’21 Snapshot Digital-First, Omni-Always Stores as fulfillment hubs Omni-always platform Invest in key projects for enhanced capabilities Instituted cross-banner browsing Launched pre-store opening curb
Slide 19: Digital Transformation
BED BATH & BEYOND 19 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
Slide 20: Store Remodels
BED BATH & BEYOND 20 • Redesigned and transformed Chelsea Flagship in NYC • 70 store remodels to-date • Initial output of sales exceed estimates Q2’21 Progress • Expects to deliver approx. 130 to 150 remodels across US & CAN) as planned FY 2021 TRANSFORMATION UPDATE Store Remodels AFTER BEFORE
Slide 21: Chelsea, New York City - Reopened July 2021
BED BATH & BEYOND 21 TRANSFORMATION UPDATE Chelsea, New York City - Reopened July 2021 UNIQUE CUSTOMER EXPERIENCES Soda Stream Bubble Bar, Casper’s First Shop-In Shop, Interactive Vacuum Shop & Café 3B™ REIMAGINED SHOPPING An Open floor plan with increased sightlines, improved way-finding signage, e
Slide 22: Store Fleet Optimization
BED BATH & BEYOND 22 TRANSFORMATION UPDATE Store Fleet Optimization • Closed 5 Bed Bath Banner Stores (165 closures-to-date) • Sales transference rate of >20% (above expectations) Q2’21 Progress • Continue to expect approx. 200 store closures through FY21 FY 2021 Continuing to position our network f
Slide 23: Assortment Progress: New Owned Brands Launched in Q2'21
BED BATH & BEYOND 23 TRANSFORMATION UPDATE Assortment Progress: Launched 3 New Owned Brands in Q2’21 Bring your story to life Launched June 2021 Start with food. End with love. Launched June 2021 Launched July 2021 Solutions for a well-kept home
Slide 24: Six Owned Brands Launched Ahead of Schedule in 1H21
BED BATH & BEYOND 24 TRANSFORMATION UPDATE Six Owned Brands Launched Ahead of Schedule in 1H21 Bring your story to life Launched June 2021 Start with food. End with love. Launched June 2021 Launched July 2021 Solutions for a well-kept home Escape the noise Launched March 2021 everyday comfort Launch
Slide 25: Owned Brands Sales Performance and Penetration
BED BATH & BEYOND 25 FY 2020 approx. 10% Q2’21 above 20% FY 2021 run rate > 20% FY 2023 GOAL OF 30% Penetration greater than 20% in chain Driving new customers and reactivating customers Owned Brands Sales Performance and Penetration Ahead of schedule on Full Fiscal Year 2021 and 2023 Owned Bran
Slide 26: Continued Growth in buybuy BABY Banner
BED BATH & BEYOND 26 Positive Net Sales growth vs. Q2’20 with market share increasing growth of +high-teens percent Consecutive market share gains4th month of Digital penetration driven by BOPIS orders greater than 50% Continued Growth in buybuy BABY Banner #1 specialty baby retailer in markets with
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 Q2’21 PROGRESS Supply Chain and Technology Delivering Value Increased digital capabilities Flexibility, agility and scalability Speed to market More efficient technology operations Shift spend towards innovation I
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: Continued Gross Margin Expansion
BED BATH & BEYOND 29 36.0% 34.1% 33.3% 33.6% 34.0% - 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 30: Shareholder Value Creation Through Capital Deployment
BED BATH & BEYOND 30 $225M $150M $130M $100M $375M $230M in 1H21 total of $325M $- $50 $100 $150 $200 $250 $300 $350 $400 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 FY 2020 FY 2021E FY 2022E FY 2023E Accelerated Share Repurchase Program Leverage of <3.0x PMALL Divesture One Kings Lane Divesture
Slide 31: Who We Are: Key Developments
BED BATH & BEYOND 31 WHO WE ARE Key Developments People: Announced new industry-leading paid parental leave program providing 100% of pay for up to 8 weeks after birth/adoption or fostering of a new child for parents Community: Named Nicole Cokley Dunlap as Chief Diversity Officer, who will lead
Slide 32: Investment Thesis
BED BATH & BEYOND 32 WHO WE ARE Turnaround story with significant potential for sustainable financial results Long-term sales acceleration through assortment curation, the addition of Owned Brands and a digital-first mindset Enhancing gross margin & EBITDA through product mix, pricing and oper
Slide 33: Appendix
33BED BATH & BEYOND APPENDIX
Slide 34: Quarterly Summary of FY2019 & FY2020 Net Sales
BED BATH & BEYOND 34 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 35: Comparable sales and adjusted items notes
BED BATH & BEYOND 35 1 The Company notes that, similar to the first quarter of fiscal 2021, second quarter growth rates in fiscal 2021 are not fully comparable due to both last year’s extended store closures related to the COVID-19 pandemic in the month of June 2020 and the Company’s ongoing fleet o
Slide 36: Q2'21 Non-GAAP Reconciliation
BED BATH & BEYOND 36 APPENDIX Q2’21 Non-GAAP Reconciliation
Slide 37: Q2'20 Non-GAAP Reconciliation
BED BATH & BEYOND 37 APPENDIX Q2’20 Non-GAAP Reconciliation
Slide 38: Second Quarter Fiscal 2021 Earnings Presentation
BED BATH & BEYOND 38 Mark Tritton, President & Chief Executive Officer Gustavo Arnal, Executive Vice President, Chief Financial Officer Second Quarter Fiscal 2021 Earnings Presentation September 30, 2021 (Period Ending August 28, 2021)