BBBY 2026 Q2 Earnings Call

Good afternoon, welcome to Bed Bath & Beyond Inc.'s second quarter 2026 earnings conference call. Joining me on the call today are Executive Chairman and Chief Executive Officer, Marcus Lemonis, President, Amy Sullivan, Chief Financial Officer, Brian LaRose, Chief Technology Transformation Officer, Kyla Robinson, Chief Operating Officer, Lisa Foley.

Today's discussion our responses to your questions reflect management's views as of today, August 4, 2026, may include forward-looking statements, including, without limitation, statements regarding our future business strategy, goals, financial performance, outlook for the remainder of the quarter or any other period, anticipated growth, stock price, profitability, macroeconomic conditions, the value of any of our brands and investments, relationships with third parties and agreements we are entering into with them, margin improvement, expense reduction, marketing efficiencies, conversion, customer experience, changes to brands or websites, product offerings, completed, pending, or contemplated mergers, expected change in listing exchange, expected name and ticker change, blockchain and tokenization efforts and strategies, and timing of any of the foregoing. Actual results could differ materially from such statements.

Additional information about our risks, uncertainties, other important factors that could potentially impact our financial results is included in our Form 10-K for the year ended December 31, 2025, in our Form 10-Q for the quarter ended June 30, 2026, in our subsequent filings with the SEC. During this call, we will discuss certain non-GAAP financial measures. Our filings with the SEC, including our second quarter earnings release, which is available on our investor relations website at investors.beyond.com, contain important additional disclosures regarding these non-GAAP measures, including reconciliations of these measures to the most comparable GAAP measures. Following management's prepared remarks, we will open the call for questions. A slide presentation with supporting data is available for download on our investor relations website. Please review the important forward-looking statements disclosure on slide two of that presentation. With that, let me turn the call over to you, Marcus.

Thanks, Melissa. Good afternoon, everyone. Thanks for joining us. For the second consecutive quarter, our base e-commerce business delivered year-over-year revenue growth after 19 consecutive quarters of decline. Across the entire omni-channel business, revenue increased 28%. Orders delivered doubled, and both revenue and gross margin improved. Looking through the merger and transaction-related costs, I was very pleased with our team and company's performance. While two quarters are not a victory, and the work is far from finished, what matters is that the operating model is now producing measurable evidence that it is working. Revenue growth, order growth, margin expansion, and early integration results from the businesses we've acquired. When I officially assumed the role of CEO in January, we saw the company could no longer organize itself around disaster recovery. Protecting liquidity, building working capital, improving operations, and rebuilding credibility were necessary.

A company cannot build its future while looking only in the rearview mirror. We had to move from rescuing the business we inherited to designing the business we believe should exist, and to begin allocating people, capital, and attention around what will go right. It has also become clear that the most important assets we've assembled through all these acquisitions are the people. Every business we brought into the company came with subject matter experts who have spent decades understanding one part of the home and one stage of the homeowner's journey. From storage design and organization, to decor, to flooring, kitchens, installation, brokerage, mortgage, title, and all the things in between. We're assembling operators who know how these businesses work and understand the value of connecting their expertise to a larger platform. That distinction matters. We are not collecting companies. We are not a roll-up.

We are assembling capabilities, expertise, and relationship around the economics of home ownership. When we introduced our three-pillar strategy in January, we started with a basic observation. The average homeowner remains in a home for roughly 11 years. During that time, children arrive, parents age, careers change, rooms are repurposed, and all the things that happen inside the house. Insurance costs and interest rates move. Equity grows. Families renovate, refinance, relocate, and eventually sell. That's the home ownership journey. The industry treats these moments as unrelated transactions. The homeowner does not. A family experiences one continuous journey, yet must navigate disconnected companies, systems, and pieces of advice. The monthly economics begin with the mortgage and waterfall through taxes, insurance, utilities, maintenance, repairs, improvements, and the products that make the home functional, all competing for the same household income. We will never directly control the price of a specific home.

What we can do is attack the friction and unnecessary costs around it, help first-time buyers prepare, help a family understand the full monthly obligation, make insurance and title more transparent, offer products at better values, plan projects more intelligently, and complete installations more reliably. That is our mandate: to create an operating system that makes the entire homeownership journey simpler and more affordable. The 11-year journey is not merely transactional, it's experiential. Bed Bath & Beyond was part of the first apartment, the wedding registry, the first home, a growing family. It also became clear that we did not want to depend entirely on retail. History has shown both the opportunity and the risk of being purely transactional and inventory heavy. Retail remains the essential gateway where we meet the customer, earn trust through value and service, and begin a relationship that expands beyond one single SKU transaction.

Our first pillar is the omni-channel retail. You've heard me talk about it a lot. It encompasses our online marketplace business, our own inventory e-commerce business, and our physical stores. Over the next 12 months, our objective is to operate every single one of them as a connected portfolio while vehemently removing the incremental cost each would carry on their own. Each branch should retain a clear role, a capability, and a distinct reason for the customer to engage with it. The branch should not have to recreate the same infrastructure, same SG&A, and the same overhead behind the scenes. We can preserve what makes them special by consolidating the functions the customer never sees, and more importantly, shouldn't have to pay for.

Our retail foundation starts with Overstock, a founding member of this squad, one of the leading online destinations for the home with strength across furniture, area, and rugs who has seen incremental and meaningful growth over the last 12 months. The Container Store shows us how one acquisition can change the capability of an entire enterprise. It moved us from selling products that we deliver to a doorstep to being experts in storage, organization, installation, and change the relationship with the customer. With Kirkland's, it brought us global sourcing, design, and understanding how to create value through home decor. What it gave us the most was the ability to understand the margin possibilities through design and international sourcing. Retail can only introduce us to the customer. Home services allow us to deepen that trust. Quite frankly, it's where the real margin exists.

When a customer invites us across the threshold, they're trusting us with an expansive and disruptive project inside of their home where their families live. Elfa and Closet Works gave us our first reading into the home services, but we followed it up with the acquisition of Lumber Liquidators and Cabinets To Go, two of the best-known names in home improvement. They combine design, product, and installation to give that homeowner what they need. The final installation often defines the customer's view of the entire project, so we wanted to control that entire service experience. During the quarter, we acquired SFV, a Detroit-based installation and renovation network that serves the entire country for Elfa, Closet Works, Lumber Liquidators, and Cabinets To Go. They've been doing it for over 20 years, and we have the evidence to prove it.

As we mapped out the journey further, we recognized some of the greatest barriers to affordability are the lack of clear choices and connected information around the home transaction itself. That led us to enter into a purchase agreement with Fathom, a top 10 U.S. real estate brokerage built around an asset-light, technology-heavy model that brings us closer to the moment where the largest amount of value changes hands and the homeowner needs the most trust and guidance. Appraisals, cash offers, brokerage, mortgage, title, and closing are all valuable on their own. The larger opportunity is connecting them because the home transaction should not begin and end with the relationship. It should be one important moment inside of a relationship that lasts for years. One of the jewels of the Fathom acquisition, and primarily why we bought it, was the title business that operates in 36 states.

Title is often treated as a blind item on a closing statement. People don't know what it's for, don't know how much it costs, but it is a business built on volume, process, and discipline, as well as trust. Homeowners deserve to understand what they're paying for and why. The larger opportunity, and maybe the more exciting one for our company with title is title is the foundational record where the home, the owner, and the transaction history come together. Building on more than a decade of Overstock's investment in blockchain and tokenization, we intend to explore placing authenticated, customer-controlled title records on that infrastructure. The technology is not the point. The point is giving homeowners greater control over the information and reducing the cost, delay, and uncertainty of rebuilding that same record every single time a transaction occurs.

Over the next 12 to 15 months, we intend to build the title business through acquisitions and organic growth and invest in the technology that supports that vision. We also know that customers need trustworthy banking solutions from an institution aligned with its members, not necessarily shareholders, which is why we're excited to partner with Alliant Credit Union to launch Beyond Credit Union, powered by Alliant. Over the coming weeks and months, we expect to introduce savings tools, first-time homebuyer programs, renovation financing, education, all done digitally. Alongside our relationship with Bilt, our retail and rewards experience will have companies like Brown & Brown providing a choice model on insurance. The goal is not to force customers into products. It's to create transparent choices and keep the customer in control of their entire homeownership journey. As these pieces came together, one fact became crystal clear.