Bed Bath & Beyond, Inc. · NYSE:BBBY
Bed Bath & Beyond — Q3 FY2020 Earnings Presentation
43 slides from Bed Bath & Beyond's earnings presentation, Jan 7, 2021
Slide 1: Bed Bath & Beyond, January 7, 2021
BED BATH & BEYOND January 7, 2021
Slide 2: Forward-looking statements
BED BATH & BEYOND 2 This presentation contains forward-looking statements, including, but not limited to, the Company’s progress and anticipated progress towards its long-term objectives, the status of its future liquidity and financial condition, and its outlook for the Company’s fiscal 2020 fourth
Slide 3: Presenting management team
BED BATH & BEYOND 3 John Hartmann COO; President, buybuy BABY Mark Tritton President & CEO Gustavo Arnal CFO & Treasurer Rafeh Masood EVP & Chief Digital Officer John Hartmann COO; President, buybuy Baby
Slide 4: Agenda
BED BATH & BEYOND 4 1) Q3 Performance Highlights & Transformation Update 2) Financial Outlook 3) Digital & Commercial Update 4) Operations Update
Slide 5: Q3 performance highlights & transformation update
Q3 performance highlights & transformation update ct ‘
Slide 6: Consistently Executing on Strategy
BED BATH & BEYOND 6 “The consistent execution of our growth strategy is unlocking improved financial performance and we delivered a second consecutive quarter of comparable sales and profit growth” – CEO Mark Tritton Consistently Executing on Strategy ✓ 2nd Consecutive Quarter of Strong Comparable S
Slide 7: Second Consecutive Quarter of Comp Sales Growth
BED BATH & BEYOND 7 Total Enterprise Comp +2% vs LY Core BBB Banner Comp Adj. EBITDA Total Enterprise Digital Comp +77% vs LY +168% vs LY Second Consecutive Quarter of Comp Sales Growth Consistent Gross Margin Expansion / EBITDA Growth +5% vs LY +94% vs LY Core BBB Banner Digital Comp Adj. Gross Mar
Slide 8: Positive Cash Flow Generation and Strengthened Balance Sheet
BED BATH & BEYOND 8 Positive Cash Flow Generation Balance Sheet Strengthened / Return to Shareholders Cash Flow1 $1.5bn Cash & Investments $244mn Gross Debt Reduction 2 Share Repurchase Increase From $675 to $825mn ($0.5bn) vs Q2 ($1.0bn) vs Q1 (30%) vs LY Inventory Reduction $2.2bn Strong Total Liq
Slide 9: Fast-Paced Transformation
BED BATH & BEYOND 9 Positive Cash Flow Generation Consistent Comparable Sales Growth Margin Expansion & EBITDA Growth Stronger Capital Structure Fast-Paced Transformation (1) Cash Flow includes cash flow from operations + cash from investing activities, net of CAPEX. (2) Announced definitive agreeme
Slide 10: Q3 FY2020 financial summary
BED BATH & BEYOND 10 FY2019 Q3 FY2020 Q3 Diff Total Enterprise Comp Sales 2% Core BBB Banner Comp Sales 1 5% Net Sales $2,759mn $2,618mn -5% Gross Margin 2 32.3% 35.4% 310bps SG&A $932mn $891mn $41mn EBITDA 2 $45mn $121mn 168% EPS - Diluted 2 ($0.38) $0.08 $0.46 Cash Flow Generation 3 $244mn Gross D
Slide 11: Quarterly sales trends and digital penetration
BED BATH & BEYOND 11 81% 19% Q3 - Stores Penetration Digital Penetration Q3 Total Enterprise Comps 2% BBB Comps 5% Digital Comps 77% BBB Digital Comps 94% • Positive comparable sales growth led by strong digital comp sales in both core Bed Bath & Beyond banner1 (BBB) and total enterprise, offsetting
Slide 12: Core Bed Bath & Beyond banner comp sales
BED BATH & BEYOND 12 • Core Bed Bath & Beyond banner1 (BBB) delivered solid comp sales growth of 5%, led by strong digital growth and higher sales in Top 5 destination categories • BBB digital comp sales grew 94%; store comp sales declined 14% • +11% comp sales growth of Top 5 destination categories
Slide 13: US retail market performance vs Bed Bath & Beyond
BED BATH & BEYOND 13 (1) According Sensormatic Solutions data. (2) According to Adobe Analytics data. (3) According to Mastercard Spending Pulse report. Black Friday -52% vs LY (1) +22% vs LY Cyber Monday +15% vs LY US Retail Market Performance Reported by 3rd Party Data Providers US Bed Bath & Beyo
Slide 14: Adjusted gross margin bridge
BED BATH & BEYOND 14 • Adj. Gross Margin increases 310bps to 35.4% vs 32.3% 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 higher shipping costs 180b
Slide 15: Total liquidity and cash flow
BED BATH & BEYOND 15 $1.2bn (1) Cash Flow from Investing includes $238mn related to sale of non-core assets (CTS, HL, DC/Florence), net of $38mn of CAPEX; CPWM definitive agreement announced FY20 Q4. (2) Cash Flow from Financing includes $225mn related to ASR initiated in Oct. 2020. FY20 Q2 vs FY20
Slide 16: Gross debt reduction
BED BATH & BEYOND 16 $0.2bn $0.2bn $0.2bn $1.9bn $1.5bn $0.2bn FY20 Q3 Gross Debt Balance ex Op/Fin Leases Operating & Finance Lease Liabilities FY20 Q2 vs FY20 Q3 – gross debt FY20 Q2 Gross Debt1 Balance FY20 Q3 Net Cash Balance Operating & Finance Lease Liabilities FY20 Q3 Gross Debt Balance FY20
Slide 17: Non-core banner monetization
BED BATH & BEYOND 17 $600mn+ significant portfolio transformation during fiscal 2020 what we have achieved Non-core banner monetization (and Florence, NJ warehouse) Banners divested1 what we said 6 mos. ago Expect to unlock between $350 to $450mn through asset sales 5 4 Focused on core portfolio whe
Slide 18: Expanded share repurchase program
BED BATH & BEYOND 18 Reiterate Additional Accelerated Share Repurchase Program • Expanded Total Share Repurchase Program (ASR) to up to $825mn from up to $675mn during the next 3 years • October 28th: Launched $225mn Accelerated Share Repurchase program (ASR-1) • December 14th: Announced Approval of
Slide 19: Financial outlook
financial outlook BED BATHS BEYOND
Slide 20: Enhanced EBITDA outlook
BED BATH & BEYOND 20 $500mn to $525mn vs Proforma FY19 of $425mn Approx. 35% +200bps vs Proforma FY19 of 33% $8.0bn to $8.2bn Recapture & Sustain Sales vs FY20 FINANCIAL OUTLOOK Enhancing EBITDA to a Range portfolio transformation is now complete1 Tightening Revenue Range Reiterating Gross Margin (1
Slide 21: Net sales bridge and comparable sales guidance
BED BATH & BEYOND 21 • Expect approx. $3bn reduction in net sales vs FY 2019 after banner divestitures and store closures - 5 banner divestitures1: - >500 store closures planned (including 340 from divestitures and 200 from store network optimization by the end of FY 2021) Net Sales bridge FY 2021 C
Slide 22: Gross margin and SG&A bridges
BED BATH & BEYOND 22 SG&A bridgeGross Margin bridge 2019 Actual Gross Margin FY2019 Proforma Gross Margin Margin Improv. From Product Sourcing Channel Shift & Increased Freight Cost Impact FY2021 Projected Gross Margin Promotion & Markdowns/ Coupon Mgt Product Mix Including Own Brands 2019 Actual SG
Slide 23: EBITDA bridge
BED BATH & BEYOND 23 Mid-single-digit Margin EBITDA bridge – key drivers of expansion (approximate figures) 2019 Actual EBITDA Non-Core Asset Divestitures SG&A Cost Restructuring Programs Store Closure Impact FY2019 Proforma EBITDA FY2021 Projected EBITDA Reinvestment Spend Merchandising Improv From
Slide 24: Projected debt and lease liabilities
BED BATH & BEYOND 24 $0.2bn $1.5bn $0.2bn $0.2bn FY 2020 Projected Debt/Lease Liabilities Operating and Finance Lease Liabilities Bond debt FY19 Debt/Lease Liabilities Change in Debt Q2 Change in Operating & Finance Lease Liabilities Q3 $0.2bn$1.5bn $2.4bn ~($0.5bn) ~($0.5bn) $1.9bn $1.2bn ~$4bn ~$3
Slide 25: Inventory reduction
BED BATH & BEYOND 25 • ~$1bn (at retail) inventory reduction underway: ‐ non-core asset divestitures ‐ store closures from fleet optimization FY19 Inventory Balance $2. 1bn $1.6bn FY21 Projected Inventory Balance ~$.5bn reduction at cost (~$1bn at retail) reduction Notes: Numbers may not add due to
Slide 26: FY2021 outlook summary
BED BATH & BEYOND 26 (1) Cost Plus World Market definitive agreement announced FY20 Q4. • Providing additional visibility on P&L reshape after planned divestitures and store closures • Enhancing FY 2021 EBITDA outlook to range of between $500mn to $525mn significant and fast-paced portfolio transfor
Slide 27: Digital & commercial update
digital & commercial update
Slide 28: Digital comparable sales and customer metrics
BED BATH & BEYOND 28 DIGITAL & COMMERICAL UPDATE (1) Based on current trends. • Digital comparable sales up 77%; core Bed Bath & Beyond banner digital sales +94% • 2.2mn new customers to digital • ~21% of Bed Bath & Beyond customers placing 2+ orders vs 16% in FY19 Q3 • Online conversion for Bed Bat
Slide 29: BOPIS performance
BED BATH & BEYOND 29 DIGITAL & COMMERICAL UPDATE BOPIS percentage of total digital sales customers used BOPIS in FY20 Q3 BOPIS Net Promotor Score vs. 49% in May (when service launched) BOPIS orders ready within 30 minutes
Slide 30: Marketplaces and checkout improvements
BED BATH & BEYOND 30 DIGITAL & COMMERICAL UPDATE Available on Bed Bath & Beyond.com and buybuyBABY.com 2 Marketplaces – Instacart.com and Shipt.com HarmonFaceValues.com added to Instacart 3-step checkout reduced time to place order Overhauled entire checkout journey Added new payment types of US hou
Slide 31: Digital customers and app metrics
BED BATH & BEYOND 31JANUARY 6, 2021 12/5/20 12/5/20 12/5/20 New digital customers visits, growing 50% YoY app downloads Increase in Net Promoter Score for digital YoY DIGITAL & COMMERICAL UPDATE
Slide 32: 32BED BATH & BEYOND
32BED BATH & BEYOND
Slide 33: Operations update
BED BATH & BEYOND 33 OPERATIONS UPDATE ✓ Supply chain reformation ▪ Added secondary national carrier and several regional parcel delivery carriers to help alleviate COVID-related shipping constraints and additional freight cost pressures ▪ Continued to focus on health & safety of associates working
Slide 34: Operations update
BED BATH & BEYOND 34 BATH KITCHEN BEDDING HUB OPERATIONS UPDATE
Slide 35: buybuy BABY performance
BED BATH & BEYOND 35 • Represented 10% of total Company net sales in FY20 Q3 • Strong growth in digital, up 40%, representing >50% of total BABY sales • Enhanced digital experience with convenient payment options, including After Pay and Apple Pay; upgraded and relaunched BABY app in November 2020 •
Slide 36: Q3 total enterprise summary
Q3 total enterprise summary BEDBATHSBEYOND
Slide 37: Q3 total enterprise summary
BED BATH & BEYOND 37 Q3 TOTAL ENTERPRISE SUMMARY (1) Cash flow generation includes cash flow from operations ($44mn) and cash flow from investing driven by proceeds from non-core banners and real estate monetization, net of capital expenditures ($200mn).
Slide 38: January 6, 2021
38BED BATH & BEYOND JANUARY 6, 2021
Slide 39: Non-GAAP reconciliation
BED BATH & BEYOND 39 * The Company is presenting certain non-GAAP financial measures for its fiscal 2020 third quarter. In order for investors to be able to more easily compare the Company’s performance across periods, the Company has included comparable reconciliations for the 2019 periods in the r
Slide 40: Non-GAAP reconciliation
BED BATH & BEYOND 40 * The Company is presenting certain non-GAAP financial measures for its fiscal 2020 third quarter. In order for investors to be able to more easily compare the Company’s performance across periods, the Company has included comparable reconciliations for the 2019 periods in the r
Slide 41: Non-GAAP reconciliation
BED BATH & BEYOND 41 * The Company is presenting certain non-GAAP financial measures for its fiscal 2020 third quarter. In order for investors to be able to more easily compare the Company’s performance across periods, the Company has included comparable reconciliations for the 2019 periods in the r
Slide 42: Non-GAAP reconciliation
BED BATH & BEYOND 42 (in thousands, except for share data) (unaudited) * The Company is presenting certain non-GAAP financial measures for its fiscal 2020 third quarter. In order for investors to be able to more easily compare the Company’s performance across periods, the Company has included compar
Slide 43: Building a modern, durable business model
APPENDIX building a modern, durable business model PURPOSE MISSION t re-establish our authority and be the preferred make it easy to omni-channel home destination driven by teams feel at home consistently delivering balanced durable growth PRINCIPLES customer inspired — omni-always people powered _