BBBY - Earnings call transcript Q3 2021 | 20230930-DK-Butterfly-1, Inc.

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Operator

Welcome to the Bed Bath & Beyond's Fiscal 2021 Third Quarter Earnings Conference Call. My name is John, and I will be your operator for today's call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] Please note the conference is being recorded. turn over now Susie will I the to call Kim. And

Susie Kim

Welcome and fiscal good you, to morning, call. Thank earnings everyone. our quarter XXXX third

and are President Financial today Tritton, Gustavo CEO; Officer. us Chief Arnal, Joining our Mark and our

may exhibits risks we our fiscal third our bedbathandbeyond.com, Web presentation uncertainties, be to uncertainties XX-K actual in more site risks performance, quarter filings to forward-looking The and our long-term no the models, related say you Investor statements slides or the statements, and as and Form such and X-K. cause detail slide Factors XXXX or Report obligation conference about to found and at Please we what SEC Form statements. these to to differ from our refer revise begin, including the in most let to This company could outlook results release report and Relations on call Before call remind during we regarding XX-Q. today. for on undertakes update our can our section refer our contain that that are on statements Annual references our to our All the forward-looking quarterly periodic objectives. any including me materially the recent earnings company's Risk Form subject section and of internal

prepared measures generally certain the that information in amounts exclude the comparable are have excluding Additionally, with of accepted financial or directly that effect that are most accordance principles. will contains today to measure the discuss amounts accounting subject adjustments we in included

to release to over GAAP, the our presented to table It pleasure reconciliation a exhibit Web to included our with comparable earnings measures turn our refer Form X-K to the today. accordance is my Mark. on and filed an the now site please as in For in available most call

Mark Tritton

safe and had healthy everyone. morning, these turbulent hope times. holiday and Susie, you, during We Thank season a you good

complexities first short-term a business of end-to-end our permeate versus plan, transformation, a the forces turnaround environment. of executing our to bifurcation current results our demonstrate highly leading long-term performance. a in macro conditions, Unprecedented this During to long-term continue unpredictable managing year operating comprehensive near-term in a most recent while

offset demonstrated costs While freight our demand we have our ability core inventory multi-year These effectively impacted chain at global near-term higher pressures, progress been despite supply during the that volatility, on season. led transformation. the disruptions [Indiscernible] meet conditions to holiday of increasing

our and We comp sales in net continued decline. billion quarter, to modernize infrastructure, execute below our agility More during a and enhance $X.X of specifically, any momentum to future our operating our our with initiatives environments. expectation, third long-term strategic revenue was X% the

customer customer the affected mid-single even were met wasn't last sales for once locked our digit product our demand and the shared kitchen October. Overall, flow our such September inventory. our receipt we position, vendor improvement preparation relevancy such key November, healthier electronics, limited strong impacted the demand Unfortunately, remained strong our as we as and against illiquid and and a plants product. fortified bed not year, currently in to issues availability. approximately drove in This as to you arrested impact an to of December. impact as to As or on and The decline. with as our Operational compromised strong appliances quarter XXX operational sales to Issues on further in and infrastructure In slower with demand, constraints, compared bath. experience versus inventory $XXX to position greater legacy holiday with in such lost and supply the and ability challenging and backdrop million depth higher season right categories we breadth trends. start of previously, resulted and experienced sales the a environment, personal secure was items, chain improvement in our a inventory drive despite comp in well in challenges top as availability shelf

steps our took printed disproportionate also during We quarter which the our our for a driver marketing and resources traffic circulars, rebalance of reduction to the correct are key business.

stores disproportionate a are are our our As sales a from context, of trip and driver. amount generated key circular at

and with plans was were circulation. Timely ability also impeded reach our distribution paper these by we additional to historic a in activate a met prevented of and traffic to amid and we distribution, traffic issues vendor Yet, demand an successfully converted supply and delivery sales. our issue ability to and for full in-store levels circular able conditions, impacted October, somewhat print scale of While return labor further online. both that vendors generate to circulars drive normalized

and We're customers. in period. Beyond delivered destination digit our For to top underscoring over as digit comp a sales day Cyber customers comps delivered as Black sales example, to for we five U.S. shopping to also see high who the returned stores Monday period, U.S. a single mid-single brick-and-mortar over Bath year, Friday holiday Bed pleased this the this

impacted on supply we increases of from our quarter, and During we recovery. chain last despite once swiftly by SKU also QX, and mix the cost freight the optimization gross to surgical still we ensure approach pricing plans delivered remain XX.X% diagnosed remain margin our achieve basis were the well that actions, sharp in pressures We inflation, quarter, implemented pervasive promotional to us freight a with product experience market so. plans SKU pressures. in cost competitive and margin in our above we and Stemming

price optimized We the despite November. last activity, competitive month throughout retail regular of our the year, highly penetration increasing our quarter promotional also versus

promotions just our strategies are our our adjusted an rate, message, but above by gross and XXXX diversify significantly, value decisive totality. coupons clearance can we strategically without shopping driven led arsenal engagement being how actions to in exclusions, promotional we evidenced profitably. an margin As fitting Coupon have of we gross margin examples expectations not less levels. the discounts of to higher XXXX and now peak more can some drive only use with our performance, and These customers of that during event periods pre-planned

you this strategy. year of As a transformation is our financial three know, key barometer

Our all and rates. the continue merchandise are three produce to to to penetration H Studio contemporary happy with create launched profit supply related owned two brands Despite eight environment, happier our lifelong needs. planned enables year of owned chain for owned brands we inventory moments XXXX. their for everyday increased fiscal for to total accordance our our strategy, at high key modern home seasonal margins XB cornerstone and final In of the customers algorithm. items assist with long-term of key with our help our and a memories celebratory options brands

see quarter of the after to pleased launching We initiative. key continue quarter just are first in this progress year

and progress faster Our brands as growing than with is penetration stores. more They're chain even evident our overall margin newly the higher rates owned in range product accordingly, remodeled well.

Just navigate as and anticipate further. our quarter, leverage in implementing near In performance, and and on we traffic and will bottom enable quarter. as complex top to margins to delivered near-term, the focus we the acceleration driving our the solutions holistic marketing And defining constantly We're strengthening line will are medium-term. we we gross that over plans during assist remain we elevating continue conditions each to on sales us is to transform.

We're our the containers near-term, processes warehouses inventory within our with that (ph) unlock chain we've in our to ability stock vendors to capabilities to stores. continue faster efficient more to third-party capacity to demand, our also our change owned current meet inventory systems long-term one working adding supply and processes beyond automatically to with we Concurrently, number digital In and assist decrease priority availability. our a DCs Our our demand store we enhance above is warehouse our best] direct created fulfill new are and and investments. sources vendor to from improve positions, To to in shift marketplace increase [to logistics must position stores. is constrained shipping holds and inventory, improve to between target and to flow inventory mid and once way top transfer flow.

Our supply interruptions to reformation prevent demand, technology legacy will add plan through This are more our nimble the basis transformation. tools alleviate our ‘XX supply in beyond. better chain enablement ongoing help ahead To the inventory the create We efforts. and times our and infrastructure limited and and holiday us believe chain undermined to necessary of offset future. supply processes our constraints mitigate streams in of misalignments will in to fiscal reinforcement work operating model visibility a these was response and impediments, as the planned

our will largely enhanced we're our therefore therefore seasonless disruptions short-term resilient plan. improved imbalances normalize inventory, the eventually Given with experiencing the supply chain and

inform to will our plan. monitor category product always, our we and demand share market operational As

business. We persist. most attract that continue Recently, two we've difficulty] trends seen difficulty] [technical [technical our to segment relates categories kitchen to

environment the overall First, high market post-COVID demand environment compared in last year. continues to growth to normalize the

Secondly, despite and XXXX, stable. total data bed, show dynamics categories decrease the nesting bath NPD is market kitchen sequentially in market the in our share from still

optimization acquisition versus we Beyonder event one our stabilize We the initiative. quarter, beyond in conclusion new customer X.X of as of share expect leading fleet most [ph] our successful membership quarters traction and X.X plus strategy XXXX, declines narrowing to of the program. one after our in from and of are Furthermore, plus store fiscal loyalty members We by largest grew gap year, beyond Bath the prior the our Bed, to during subscriber our for years. to market further evidenced November, million our in the gained given in acquisition

for our reestablish leverage new and ecosystem our be authority, Spanning and will designed for trust long-term plans program will We as value needs, customers our preferred the ads across our banners, later of momentum we loyalty this year. to as home support banners. channels program baby new XXXX throughout this building our while all

to digital deliver our our Another double our continued bath quarter in of BABY banner. with growth more benefits highlight continues universal improvement capability, bed, as digit group growth as card overall the well BABY cost same Baby than the to buybuy Harmon. was as the key total new shopping XX% and additional a to of between

is look invested results the result to which the share. improving business, given of improve track initial strategies, our of profitability year. in are since at of to BABY and in this while these intend on we all fiscal the XXXX as approximately now planned margin own market have our expand a achieve brands this last strategic to to efforts to goal, a achieved business billion begin now targeted before sales sales even new that As We result We transformation $X.X optimization stabilized. ahead businesses in in year, we

to Bath BABY of BABY power and Of the drive combine that course, Bed, opportunities new buybuy sells the partnership Beyond we continue will through exciting & offering.

Kroger announced as our own recently example, BABY well our partnership, is important For an cornerstone of digital marketplace. as

Finally, business are saw always in we today's as managing committed you responsibly. to announcement, and our responsibly

annualized further We SG&A opportunities. explore measures will that year are such expense optimization, discretionary fleet our extending store fixed $XXX optimization costs, for savings approximately million and areas next as of

will long-term ensure current of expense We appropriate the at that not reflects an ratio business, to our sales expense while our initiatives.

three of technology, our supply no During year first has and growth this a future. profitability greater new our of to paving the From omni-channel our chain year shortage for and been are transformation, reformation merchandising activity. we initiatives path there towards and of the

margin we both plans unwavering transformational focused our to Day. gross and are our with We growth expansion through the outlined plans Investor and stabilization initiatives, at sales of deliver execution action immediate on

review Chief our results full our the Arnal, quarter quarter and Officer next Financial Gustavo year. our will for and who onto third outlook Gustavo? Now financial

Gustavo Arnal

face. Mark, commitment I making, despite we're also long-term would you, to the headwinds like the our currently underscore good shorter-term we transformation everyone. Thank morning, and to

ago, back business have challenges, year As over we overcome and recalibrated agility. I look we a our several with

Further, materialized increases our example, developments navigate can began Despite expansion have breadth as the business this, and then. and the it ongoing that underscores as will freight hard our organization, have managing quickly we're XXXX depth transformation. our was an we since For cost as predicted of to gross responsibly. we margin in adapt that

ahead we our of quarter, our our on plan and intentions maximizing capital intent our utilizing supporting transformation repurchase SG&A deployment. includes capital addition complete according underscoring we to a shareholders. in announced which to X commitment Earlier ongoing confidence to three this initiatives, to excess billion expense to cash and cash schedule, our optimization, turnaround, year remain share allocation In returning principles, also

the on ending certain Let XXXX. quarter and November, fourth now quarter, of our also fiscal well in review Saturday, December, which saw Black period Thanksgiving me of Saturday in discuss Monday outlook. third our trends. of into metrics our weekend performance, our include the results, our as the was insight quarter the will trends final greater provide particularly to Even This holiday XX November Friday day I calendar calendar the context through as cover the will our we Cyber

reported ongoing in program. ongoing plant As divestitures Total a continue expected our the a completed X% reminder, billion, and were year, as net effect to last as as our impact core anticipated, included from non-core reflect a store decline sales sales program. net from well which XX% our fleet $X.X optimization optimization banners, banner fleet representing

For third were year, X% down the quarter, XXXX. last comparable sales fiscal X% versus down and versus

single comparable digits saw Encouragingly, within comp fiscal single Cyber Comparable on the to calendar a in and in improvement sales growth Monday Thanksgiving saw As stores. over basis, quarter high sequential mid-single digits Mark sales digits. November, the period. and the sales we down grew into our U.S. we November low flat discussed, of were

down the reflecting was in sequentially and traffic in down return pandemic-related following most improved a comps month, evident stores. store U.S. and each For when to fiscal last store slightly positive declines. overall were comps stores X% were just year November, quarter, This

our versus gross Bed sales to Buybuy comparable & net similar rate very Adjusted the a deliver a Bath By penetration results business when banner, continue margin continues year. last Our last sales, XX% the X% comparable strength represented particularly year, we versus sales sales mid-teens XXXX. to X% and compared decreased of to compare strong be experienced versus to Despite in merchandise XX.X%, BABY XX% XXXX. basis than from XXXX. growth driven digital with more decline internal own from higher digital last channel year points our quarter. pandemic, based points in important, total last expansion, to Beyond have basis than points last margin and successful the our that our was of XXX percentage costs higher basis although dollar XX than actions outcome of compared primarily pleased expense to offset lower and freight SG&A line brands XXX of expected plans, given We're basis revenue XXXX. year was increased to above of as points year. XXX with sales, pricing on

special deferred the assets there details I focused adjustments future. ensure on starting I fixed significantly XXXX costs, third And note accounting tax GAAP business income and charge savings were context company's discretionary will remaining we which quarter. enabling by the a million quarter. lower only in of with through target $XX investments, areas certain the allowance impact quarter, GAAP quarter long-term per of next annualized items our adjusted of of spending. between These share, any sales points while company's last difference non-cash we're by $X.XX on with million, valuation These a to transformation performance, of This specifically, fleet optimizations, deferred EBITDA $XXX lower to that savings next To year, tax were would assets. initiating expenses basis utilize with does alignment $X.XX approximately diluted the further the plans. related EPS quarter, reflects tax optimization our allowance As the and not like our XX was the during for against will more expense associated such XX.X%. across share touched driven loss during $X.XX our of there materialize gross SG&A of was to predominantly margin managing to a to fiscal We to gross we're committed reported overall appropriately. adjusted valuation the of and ability driven profit. plans as effects a

results calls, continue progress QX to transformation. initial our decrease loss the special items, more EPS the Special a of over of for As time, we adjustments adjusted business. our provide and stages we was plan these shared through On our as therefore excluding of to I basis, and an performance QX items $X.XX, on EBITDA. adjusted underlying are reflecting lower sales a representative from excluded picture our to

flow sheet challenging our million to we chain quarter the the period with to increase third seasonality the equivalent non-seasonal supply holiday environment. the consistent in of use of balance business, anticipation operating during $XXX flow, of inventory cash we of and the prepare Turning for as a of the approximately cash predominantly reported

Additionally, supply of $XX in remodels, capital approximately invested with in IT we million capital accordance principles, chain our store systems. allocation and

from This even investment the a our quarter, end share of forma million balance million, now and $XXX $XXX our program I was more $XXX in of cash third positive the in driven outstanding. balanced discuss million repurchases reduction cash million shares million On the advancement recent with three our at year announced cash our by November currently repurchases. at XXX $X.X after was a and shares full shares. outlook. we million billion Our our shareholders has we data-driven quarter, XX% or billion. to expected. was Accordingly, share repurchase the approximately of our to liquidity approximately by the shares, as remain We December returning flow repurchase plans. XXXX quarter, quarter taken year share of Program and XXXX following pro a X, total balance to-date, quarter-end X count quarter will fourth in to million $X approximately $XXX was the activity total More than acceleration during in cash XX committed post share approach. and operating executed than more

Omicron including guiding in of a particularly trends. cases the surge COVID-XX visibility, to to on continue given related environment, current We the to-date we're variants. the quarter based actively monitor the development Hence,

the on growth approximately digit the costs, divestitures increased to fourth gross offset pull billion, invest expected month retail in shopped XX%. ranging sales into be December on quarter, and week again, as low double margin single volatile the decline to well as year-on-year on of sales any digit digits. pattern highly high shelf customers fleet our adjusted of $X.X a inventory. as followed forward freight to these continue Taking we're availability unlike earlier, will sales for ability XX.X% to of the estimating depending are business, single comparable to a of declines account range expect Our to the from comparisons. year, due Net prior we Based optimization in of

to adjusted an $XX to to sales $XXX margin EBITDA the range $X.X leading EPS to be expectations, and our million range million, is Given of in $X.XX. estimated of adjusted

results result guidance expectations full following. QX, for the our of billion. our quarter expect we're third now As approximately and sales updating We $X.X a year to of net

For the modeling XX.X%, for XXXX. fiscal this in to a translates a to versus Adjusted expansion comp last to single also full year for expected year and year. of purposes, high digit approximately now is an margin XX% gross the be range

of SG&A sales of As our the a XX% is now sales. result total of be to assumptions, range net expected in

dollar range million. $X.X. our with note, assumptions please adjusted to our changed. be to not in is expected now negative EBITDA have an range of This However, adjusted translates million line revised $XXX of to $X.XX $XXX to EPS In estimates, a

assumptions expect share balance in our positive operating of and million billion we a program. flow approximately By repurchase total approximately cash include to for and have next sheet cash accelerated quarter, Our share X $XXX flow plans repurchases. CapEx million, by year-end, of $XXX

with We in to depreciation assumptions EPS today's have provided and and also additional assist interest presentation tax amortization, of model. rates

near-term we expectations now forward as strategies to detail, for we're year Mark, and sharing many remarks. to plans positioned pivot year. we're I so next over new anniversary face closing call activating turn fiscal particularly the this results, Mark dynamics the will look our of we We quarter. some fiscal for the for XXXX, in to or discussed As well

Mark Tritton

is year sustainability that delivering of quarter a highly scale transformation joined has remained anything our reminded environment. our constant long-term since a running unpredictable third on for first three simultaneously and structural as diagnosing are we it results goals. demonstrated, aspects I we're transformation quarter a quarter business in said, this to executing implementing and issues, company, solutions by full If ensure the That

macro any acquisition progress our strategy, improving greater it business, to million and XXX our look to pricing that the continue ability strategy, forward more respond This face customer than evident to banners in to areas require customer we in-store group of past While our to unlocking our forces. challenges, quarter, we're support. visits our was online. of our and in further We business BABY

the own early omni that first business quarter transformation to by life productive third our revitalized every transformation While answer a continue long-term national and store legacy and to fleet by our more of foundationally always a we very We brands, of moment stages more mix retailer, multifaceted inspirational the our a execute Beyond Bed supply that all BABY a brands strategic assortment changing to merchandise customer become a modernized the change technology to reforming remodels, is Harmon in principles plan, buybuy offer our & have concluded Bath product and in multi-year our remain optimized we through just is capabilities. target banner, goals. achieve digital through our through needs of our the to and unique enabled chain

for we a base normalized forward we prepare grow. upon to XXXX, environment business operating a which to of in with As look

your will now We questions. take

Operator

Steven [Operator from Forbes first Instructions] question Our from Guggenheim Securities. is

Steven Forbes

category plans among on difference changes. expand members provide behaviors on the in on how I Curious loyalty these just and promotional could start responded if And And Good to any you the versus pricing if color performance. focus quarter. members. to morning. that non-loyalty you maybe the customer Mark, some implemented the during customer wanted to noticed destination just were

Mark Tritton

competitors. so Good in end Yeah. with through QX, we is the baskets changes. and market really that prices we’re think customer through been we And enforced as those monitoring implemented We've through accordingly. our et cetera and price scraping line as QX compared in were [Indiscernible] and sequential well our to responding see morning. pricing The QX begun average the consistently of

So price with increases. we've tension seen the no

terms stable issue. of that's that competitors a created price that's so caught obviously up, where margin and our increases now And we're in assisted behind environment a we've little

engage loyal and the in between general actively terms we customers, customers customer acquisition of a In response strategy. customer

value customers. And actually actually million to create target QX them some was long-term half and of and Our that introduce over the arc through to engagement. and stickiness plus we've achieved December, a beyond

at our we’re to was which circular, in regular with the quarter there. connecting that but customers engagement was of just traffic beginning process, around key deficit our generation, specifically So like a the affecting good Real some issues with assets stores.

Steven Forbes

maybe And sort reiterated repurchase quick Gustavo a here. the Thanks. just share here commitment think the what despite follow-up, I during quarter of you transpired

know as the help cash but color So you cash think any for you as us of cash years understand flow better think flow, where the just we of about on I year mentioned don't use could right why couple modeling conviction provide next some I the a free just here. operating if capital whole? color sort that's and see you positive sort the maybe flow, of now, right free on

Gustavo Arnal

Sure. morning. I two position, [Indiscernible] the key Look, guide there's Good between principles Board. Mark and and our discussions that share repurchase

liquidity, we allocation, capital of funded that the terms that. ensuring that at and in is business right and is one have ensuring is first The

have and We continued funding, needs we having balance cash in capital investment And the strong business. liquidity. strong continue the

average just your close of share. for program, out we because there's free repurchase and $XX third prevention we intervention. billion the terms is initially per [$X] in seeing crucial operating when to would increasing and Free at the On question operating the repurchase cash cash the we're that. an we cash said, company of slightly that. as fourth is done don't more than And a inventory slightly took operating on the our flow long-term flow, on season, holiday the where of our lower the with we fiscal, Look, is the that, value flow quarter ahead of have we today. a cash stock potential than of operating more positive anticipated. are share much be negative intrinsic taken see outstanding, projecting flow Beyond continue short-term shares might higher than continue share of (ph) cash around This long-term. as therefore in Long-term, cash - flow you about probably we

Operator

Christopher our And next Horvers from is JPMorgan. question from

Christopher Horvers

morning. Good Thanks.

long-term. So follow with up first, question, a near-term something I'll more

recognizing stimulus you up. So that about you specifically there's talk also basis, been volatility, of coming and where can to-date fact quarter that you are a the have on lot more

you the to guide? are are where you and of quarter quarter So get baking the in of for date to sort to what balance the

Mark Tritton

Yeah.

December XX, And through guidance we're that comp date for to quarter single the at digit is we're high full that with decline. consistent look, quarter. So the providing fourth

said a of weeks think growth, prepared that a weeks consumer There the of remarks, were saw I clearly, decline. we’ve pattern And month saw was there we volatile. the we terms in December chain in purchasing were It's that supply (ph) the we availability that on the very [retention] or navigate challenge we're rotating challenges key as seeing habits earlier items. later, well fast can as of and into. here

see date. consistent quarter guidance So is the with we that to trends the quarter

Christopher Horvers

completely details investments about another then, it that give need the than in for cost what bottom the cost it you for I But year, And being And plan? urgency $XXX you year? quarter to you'll on something that you the million next executes technology? savings know just wanted originally in I thought? it that Is if they? see versus you Where make are think higher to And infrastructure do of line that supply Is to the $XXX do Is to call. are plan that think Is ultimately, drop as drives reinvest wages? is you new it fourth so, coming does that, tune the reinvested? the out over more any chain that where have million you pressures? Understood. understand us in?

Gustavo Arnal

business Look, the about Sure. about not responsibly. it's urgency, managing it’s

bit a our SG&A remains just falling as have check of our in revenues Our we want algorithm. quarter. that to short for this percentage ensure long-term sales And

costs, optimization fleet April. on any And program. fiscal in is when opportunity just we in we provide constantly said, this you more as into provide our fixed managing managing that constantly looking So just ‘XX cost, deeper on guidance about perspective will

Mark Tritton

to take we our and conservative looked they're me Christopher, plan, ‘XX our reinforce prudent make we the a that, further fundamental to out that forward, point balance on in It investments at management. to place Yeah, Gustavo the performance no we business. in let going completely connected our just SG&A, separate to at our overall in want us to I allocation. that ensure is enhance cost remains being They're the invest and to have turn existing numbers, around just from our can estimate and and capital

Operator

Kate you. next Instructions] from Thank from McShane Our Goldman Sachs. [Operator is question

Kate McShane

taking for Thanks morning. our Good questions.

brands were of You the mentioned brands you more a or at now that how goal penetration owned banner? curious similar penetration to of the is that And it? you brands We you being that ramp BABY. buybuy owned are do about see is penetration there at banner, for of quickly owned introducing can what in looking

Mark Tritton

about areas second-half multifaceted of morning. put has is Kate, program. like together the XXXX. good excited We're it is national penetration key Yeah. as that Look, be there. board opportunity predominantly to and well good buybuy very in we we'll BABY. brand a create as business launching an in very a low discretionary There brand national and label in the what business, the apparel, And nursery furniture, in business. brand owned And the there across

plans. penetration have as ‘XX more of our we do share get goals. we into So We'll that

Operator

our And Jonathan next is Matuszewski from Jefferies. question from

Jonathan Matuszewski

contributor a e-com what going have Do other pet utilization around it sales for forward? coffee we about to in morning. consumer are as like you good one goals on plan other Thanks similar Hey, standpoint? question. any doing new of a tree, for nature that your promotional I players today. highlighted should noticed products, think to And replenishment emails how taking subscription items, usage Thanks. from e-commerce things yesterday, my a some

Mark Tritton

Jonathan, been able we've in working digital the arsenal is to this their able change that had we've capabilities, with think supply Yeah, something insights have and as national I that been provide their our to vendors and it. our brand capabilities on

of our new bed stages platform, that to test its We’ll the Early So BABY. how this performs is for in arrival arsenal what be see a transfer is part but relevant. program, bath digital value business the launch of mid both a overall. and

Operator

Michael from is from question Lasser And UBS. our next

Michael Lasser

a Good question. Thanks my taking for morning. lot

comp your website had of quarters transformation, So promoting that products if folks challenges to difficult we three sell account having or to and still heavily the it use to stores down And X%. in the suggests them drive the coupon. your very very that to still you for without to your either it's inventory was into your quarter, some

able get sales balance to to as little your So you aggressively the having tougher, going drive able drive into to to better arguably look that a between to to year, sales next work see you when growth positive being do growth? be gross margin expect without environments

Mark Tritton

we through and website that We that while to and a permeated level. that percentage QX the with that let Michael, explore are artificially as the impacted and rhythm clear communication connection store business to we of a that so customer. both them you're narrows us at And for two in permeate manifested is which and Yeah, QX rhythm also and mistake have point. large just is the generated our that trigger did around had sales through on lifeline, of QX fundamental those, QX come right articulated down store. connection is, contain our the a in into has our customer circular we it What big customers for substantial circulars. coupon in the by it be a off affecting beyond. cut regular And to on our was me point does back, absolutely And LOI percentage also

fundamentals if to just have is, connectivity would we see doing year. supply So demand, the we of and last there meeting customer with were exceeded what return we and we what

long-term mean where were us. transformation that's compartmentalize can that of That we're bring on those versus using outside and to we opportunity near-term our tools doesn't so resting able what short-term pain, And alone.

ecosystem communication active omni-channel have in Chief plans can personalization, how Customer and engagement create we We new Officer, our led our Masood, environment. Rafeh and customer engagement on and ‘XX by of customer for loyalty, experience, through our using

those. going We're to reinstate just the that's of were two and during foundations all. So And weakened the quarters. last these rest fundamentals

Operator

And Gutman Morgan our from from next is question Stanley. Simeon

Simeon Gutman

with question a one ask parts. I'll everyone. Hi, couple

it this into First, inventory, then last of the of of aggressive. quarter quarter holiday. coming dots will you guess be a the problems third got that getting And if I were the more Why the just think some guide, promotions narrative, I fourth the connecting aggressive confident, the okay? looks fourth with on legs there are quarter proved like little the

why have So impacted how not sound come bed doesn't you buybuy BABY, come was? maybe it then buybuy bath hurt didn't BABY and if Thanks. there get And aggressive But more inventory? the like this it was did. how

Mark Tritton

Simeon. Hi,

the start me second with Let part.

reasons. the versus market two in strong less accessory and buybuy the was home think for is, seen I trend affected of very softening XXXX. BABY One apparel we've versus So trends

that. took it of advantage So

have We a long-term great really and DNA a part and strong in baby connection a strong business accessory there. there's nesting short-term saw the strand of a is we environment. And the business. home, between baby This kicking in apparel

we them to you plan so BABY product, terms stock. some the placed that had last coming helped of third we in might also of remember into and better So because lot real overall quarter. in year, And anniversary we've our fourth conviction performance the with inventory pre-purchased a strength issues were in that us we and apparels and QX

realize In terms with a through preparation real had vendors going really just that November of and month clear November. laid the time we we for we had were September working amount good around down quarter's question represented always the in that us plans But inventory our in of showed be soft. we and a expectations, our and position, couldn't were And what performance. of that October to been the QX disproportionate look, the

to that enough in is while chain piece actually to planned. restrictions November, in trajectory The it wasn't mentioned what originally So the terms interesting. of you we promotional had we sales changed supply the negative offset from positive of

prior had said and the that quarter the than reg price we year. We have sales in actually higher

with So we you What see deficits the actually we using because the promotions may side. communications the where weren't additional increased we to our that's is regular that offset getting one margin. price is in the perception effective offset couple on and customers, reality not in that of a evidence I penetration. had And out gross think we to money and it making

actually later other we in driving traffic So quarter. the opportunities implemented

terms in outcome, get less the end us again, to compensatory of factors goal. and promotional sales to the some So net-net

Operator

question of next our Jason America. is Haas And Bank from from

Jason Haas

talk you thanks and morning, my expect drivers Could that Good you about the Great. for for taking gross XQ? margin question.

Mark Tritton

I Jason. think fairly consistent, Yeah, they're

think, ongoing see I mix in contributing. and we brand strength that and in the

think mix product the to same, I think I continue promotional and optimization. be

in growth still gross say, from see most and So, QX. that's what pressures stability the And is of not year, than while different know Jason would supply QX a ongoing we that margin despite in we and as abating the those. in QX I chain offsetting

our strongest condense see ‘XX that we when upside projections some the So beyond, knowing post to making in of and year we're about really confident plan. feel there. We that our margin and to real parameter starts that's the three amendments

Operator

is question from Griffin next from Our James. Bobby Raymond

Bobby Griffin

total see for per everybody. notably maybe was taking morning, up. understand sequentially. supply store or and showed inventory, or exactly just just when they to hoping Gustavo, just Good question. I Thanks Mark up challenges where better I little inventory inventory and the pretty my chain a it's Because,

better from So DCs me additional any is aspect? understand to color of help to that stores or inventory issue the getting

Mark Tritton

and issue storm Bobby. It's near-term Thanks, in the a Yeah. issues. again, the perfect multi-part

legacy infrastructure. we will with now of know starting think in chain we're off really supply hold making XXXX. I our second-half that, more we're that take investments And

sell & is what very level at than of not Bath terms with but meet receipt we flow there. our hitting of we our well, it's So it. us we do And part, some a top a Beyond. able see about But We our all the of demand preparation. little talked vendors, in key to were in two initial through had XXX disappointment demand, earlier Bed high items plans

then industry creating it as the just And we was inventory part transportation on sellers, was that not ships could that had we in bottleneck. the top effectively on that of constraints had flow And the second did. the we seas. with So the

out. it's had look quarter. because the it's to we right still flow we’re short-term we inventory. inventory, rectify of And like responded just the we that the point its issue, So, That's pain a offering timing had and mentioned, quality availability inventory, we as customer seasonal, resilient this but the short-term highly

Operator

Seth And Basham our is next from Wedbush. question from

Seth Basham

Mark, a Thanks the around of sustaining you mentioned morning. you performance level and lot, market share good sequentially. that are market My questions share. same

I categories? be think your do you expect to able to market share look in gain when you to core XXXX,

Mark Tritton

a the year. -- Store and definitely move, as the it's goal, takes Seth. planned reduction turbulent been a lot optimization in alone I Yeah, mean, it’s a it's activity marketplace. relatively mean, stabilizing profit it's plan of the higher be that but some goals our There'll We for benefit But and stabilized. be ‘XX. bottom to line. penetration our still see through it'll in I

growth, bed we're in generate year transformation to the the Our is of it really been their second key through reformation our is at the sales share. full experiencing plan in growth focus goal key and bath optimize to BABY, the We've shoots our down of moment. And stabilize our doubling green that and both categories.

Operator

question from next Our Kleber from is Baird. Justin

Justin Kleber

thanks taking Yeah. Hey, question. the guys, for

on the business? broader core of to BABY just any how BABY meaningful on as margin provide Bath there. you that the up And more wanted customer to follow for the profile then How Just color vehicle business? business. Bed acquisition it a Mark, profitability compares Could you mentioned improving enterprise? the is And

Mark Tritton

the bath is Yeah, differential the between look, and there business. BABY bed a

implement bed what's so in think about business. to yet us I that store there BABY really remodel favorably we've and that the the in exciting plans opportunity plans, assortment is, the Justin product bath helped

child, by transformation. we're So with to when think they're customer that we lot send we home. a their our early customer there's our the personalize good operate of strong. forward partner I first of or really years authority some moments ecosystem and And is having college two first authority and we really is work ecosystem, and national use very a engagement we green relationship to capitalize going hence how things with us, engagement skim two in brands. think the very in the crossover, power brand, there or capture lies family I we the with engagement when when next the and utilizing of those And our we ahead the we whether -- the downsizing, manage they a with for child or of life strong important them in engage you moving, and they're if diagram their It data signs the to a can they're how of and our while very, about how that customers, think are when shoots or planning we mix, that lot term over manage two more connect

Operator

Markets. Our from is question Capital from Anthony Loop Chukumba next

Anthony Chukumba

much you thank taking and so morning, for Good my question.

was So saying release up half an got that subscribers. guess $XX. picked and that plus I $XX I question, I gift get is as I year beyond because a I which sign a press you what email up for message had well if card you would a million nearly text wondering a beyond in the a mentioned I for plus,

you. promotion for all for beyond out much how guess be So, tailwind purposes it free. figure I plus of subscriptions? And will was that Thank I'm intents trying just to a new

Mark Tritton

Thanks, Yeah. Anthony.

doubling about then longer-term with in see I mid with benefit think, that and customers, them. a a half the is them inviting and and connecting back additional the program strategy million

level not a customer, of with forecasting all of them. stickiness that We are

going engagement and that talk but it's great to to create we're be So gateway a customer. a specifically future to tracking

Operator

next is Carla Our from question from Casella JPMorgan.

Carla Casella

the first the new Hi, that close. Or, is quarter this now in store that part is store you And part of XXX talked of program? about a stores saw Is the Harmon rationalization rationalization? we program.

Gustavo Arnal

store mentioning we a Look, every broad program you the Beyond we look at That's that not know for full as profitability single specifically program XXX at I example. the do & And Bath It's of look predominantly Bed store. example, banner. But the one Harmon. of banner.

Operator

Brad question Markets. KeyBanc from Thomas next is from Capital Our

Brad Thomas

the out know and of color as like we if as how I think get transitory was of Gustavo. think kind like year that curious, Or, or these your issues, of broad specifically standpoint? some margin of and hoping it still I But just the that neutralizes thinking this of whole, do costs. guess, the guidance. ready about net be formal may ‘XX give you terms it out I to see on of out XXXX. Thanks. you Some strokes you at nets this little whole some until on obviously more wrap we thinking these the the next point? at all freight beginning Mark to inventory, point. about there think Thanks, any are you for in that you're items a get Just not headwinds? But tailwinds perhaps may Hi. sales I year. the from

Mark Tritton

full Yeah. on year Limiting come more give our back and color in comments and I ‘XX ’XX, QX will results obviously, expectation.

I through Now, industry seen half one. half will wide in will the persist issues think But persist that action immediately. our that chain we've issues communication pretty remedial because through supply that much we've we Brad, taken one, don't believe

a of on see we'll bifurcation managed market our So them results, how not we've a internally. macro but issues,

the like management, tailwind we what the BABY. continuing is of strength the on gross think see margin penetration, brand own things good I

expanding also of over but by athletes, stores year remodel end remodeled to we'll our where XX we've we're point optimizing seeing to pay think quarter this XXXX. the do Remembering quarter approximately the only I that at dividends XXX by and program quarter. store

adding which completion versus positive are remodels, So see the more we'll couple sequentially rest of the fleet. of of over next the store the comps months,

of a of as supply got well we've technology transformation our underpinnings number So chain cumulative benefits assortment. as the

believe, us, XXXX. of year stabilization for lot of we a and a after XXXX again, So reengineering in

Operator

Advisory Telsey Group. question is Fernandez Our from next from Cristina

Cristina Fernandez

the as mentioned and how rectifying send that going couponing wanted. Good morning. strategy as that you able expand you you're remarks, I on that wanted much you thinking the in to about your balancing have to earlier and you Maybe forward? ask can weren't on -- about

Mark Tritton

always with action, was able in manage off to more start just committed think, We've balanced been having a I play. overblown severe the arrangement took past. coupon. been into Yeah, to that It too We we've with Christina.

customer it opportunity. we Coupon what to want that not need a and for to it's think We rebalance So I equation. just great manage It's is an drug, a is traffic. better. just tool engagement do

to create that. in need kind balance so the And we of

coupon business. advantage So strategic still our a committed in to as

Operator

Susan from Riley. B. question. one And final And time have for we that'll be Anderson from

Susan Anderson

traffic that stores seeing then of the and taking performed year-over-year year Hi, how better next? stores in remodeled what question. just your Thanks Thanks. on number and the sequentially? in then for still you good are the morning. also And and stores, my for curious metrics I'm remodeled the this expectations also, are

Gustavo Arnal

Yes.

was terms traffic level. month Susan, So, in it quarter. shared of of single as digits, the QX, in in improved we the sequentially high we It saw low below at November, store earlier the last traffic, positive through comp sales digit. year double And

XXX value the On but store promotional pricing year-on-year. conversion improving was we track been as AUR So and store improved. also traffic challenged, a given our average side with improved three flip remodels, remodel period. optimization the year-on-year is second question on plans about taking. our transaction the our your continue And therefore over we've improved year was The

year of the For supply XXX are of we chain these given challenges, probably to stores. the this this targeting we end stores. fiscal, some pleased closer XXX XXX to will we're And with performance

So own far those stores of balance higher brands and in the over mid-single chain of we're and digit penetration ahead of margins. XX completed we've remodel the remodeled seeing higher with growth sales stores

Operator

today. today's participating may disconnect. for you and you Thank now gentlemen. call concludes That Thank for and ladies you

20230930-DK-Butterfly-1 (BBBYQ) 6 Jan 222021 Q3 Earnings call transcript