Bed Bath & Beyond, Inc.

Welcome to Bed Bath & Beyond's fiscal 2021 first quarter earnings conference call. My name is Sylvia and I'll be your operator for today's call. At this time, all participants in a listen-only mode. Later, we will conduct a question and answer session. During the question and answer session, if you have a question, please press star then one on your touchtone phone. Please note that this conference is being recorded. I will now turn the call over to Suzy Kim. Suzy, you may begin.

Thank you and good morning, everyone. Welcome to our fiscal 2021 first quarter earnings call. On the call with us today are Mark Tritton, our president and chief executive officer, and Gustavo Arnal, our chief financial officer. Before we begin, let me remind you that our fiscal 2021 first quarter earnings release and slide presentation can be found in the investor relations section of our website at bedbathandbeyond.com. and as exhibits to the Form 8K we filed ahead of this call. This conference call and the slides we refer to may contain forward-looking statements, including statements about or references to our outlook regarding the company's performance, our internal models, and our long-term objectives. All such statements are subject to risks and uncertainties that could cause actual results to differ materially from what we say during the call today. Please refer to our most recent periodic SEC filings for more detail on these risks and uncertainties, including the risk factor section in our annual report on Form 10-K and quarterly report on Form 10-Q. The company undertakes no obligation to update or revise any forward-looking statements. Additionally, the information we will discuss today contains certain financial measures that exclude amounts or are subject to adjustments but at the effect of excluding amounts that are included in the most directly comparable measure prepared in accordance with generally accepted accounting principles. For reconciliation to those most comparable measures presented in accordance with GAAP, please refer to the table in our earnings release available on our website and included as an exhibit to our Form 8-K file today. It is now my pleasure to turn the call over to Mark Tritton.

Thank you, Susie, and good morning, everyone. Our first quarter results demonstrate continued momentum in our transformation as we progress towards the goals we outlined last quarter and, most importantly, at our investor day. 2021 marks the first year of our three-year transformation following the groundwork we laid in 2020, a year of historic and necessary change for this organization against the backdrop of unprecedented challenges due to COVID-19. We took bold steps to build a strong foundation through talent and team, financial capital and strategy, which enabled us to begin changing the trajectory of our business last year. As our first quarter results prove, we continue to deliver profitable growth as we reestablish our authority at home, recapture market share, and unlock our group's potential. For Q1, we delivered our fourth consecutive quarter of comp sales growth, and achieved gross margin that exceeded our expectations. We continue to execute quarter after quarter, and we are pleased to be raising our full-year guidance outlook today. Gustavo will discuss our financial performance and outlook in more detail shortly. In summary, we have started a new fiscal year in a position of strength, and are clearly on track to accomplish our 2021 goal as part of our three-year growth plan. I want to touch on some of the important highlights from the quarter that underscore our progress. We are accelerating growth through our digital-first Omni Always focus. Net sales of approximately $2 billion for the quarter were comprised of 38% digital penetration at similar sales levels to our strong performance last year, even as stores recovered with customers returning to in-store shopping. This digital penetration is nearly double our 2019 levels, making digital a new strength for our organization. This growth on a two-year basis was 84%. We're continuing to improve the customer experience, most recently expanding our same-day delivery capabilities in both the US and Canada. Through our partnership with DoorDash, same-day delivery is now available in an additional 3,000 zip codes in the US and 47 cities across nine Canadian provinces. This follows the successful launches of our BOPUS and contactless curbside pickup services during 2020. Our stores continue to be an operational strength for Bed Bath & Beyond during the quarter. In Q1, 31% of our digital demand was fulfilled from stores, with Bofus representing 14% and ship from store in the same day delivery, accounting for 17%. Our footprint plays a vital role in our digital-first Omni Always strategy. We are also enhancing the customer experience with Bed Bath & Beyond banner upgrades and remodels, through our previously announced store remodel program. While we have already upgraded and refreshed the entire store fleet with signage and assortment curation, we also initiated 26 full remodels during the quarter, which was our targeted quarterly goal as part of our 130 to 150 store remodel plan this year. Ultimately, we will remodel 450 stores over three years, representing approximately 60% of our store revenue base. Early data from our remodel shows positive indications that sales and margin growth are exceeding our plans across both our prototype A and B upgrades in our pilot Houston market. As New York City returns to its original strength, we're excited about the upcoming unveiling of our flagship Chelsea store in New York as the city fully reopens this summer. We have transformed this store with new concepts, fixtures, open sight lines, revised merchandise, and a customer-centric layout for easy and convenient focus and checkout directly in the city. As for our assortment, we continue to differentiate Bed Bath & Beyond with a curated mix of important national brands and the addition of our own brand portfolio. As planned and previously discussed, we successfully launched our Nestwell, Haven, and Simply Essential lines during the quarter. And this month, we also announced our next launches of Our Table and Wild Sage. Our six brands squared away will launch this July. We have now reached our first half goal to launch six of eight own brands ahead of schedule. Furthermore, our own brand penetration is currently at a high team's percentage, almost double last year's levels. We are well on our way to our 20% goal for 2021. and 30% by 2023. At our Bye Bye Baby banner, we returned to strong growth in Q1 with net sales increasing more than 20% versus last year when stores were still open. More importantly, sustaining its return to positive comp growth, Baby delivered a low single-digit comp on a two-year basis. Our goal to be the partner of choice for new parents is resonating. And we are confident of Bye Bye Baby's bold trajectory towards our 2023 goal of more than $1.5 billion in sales. Finally, we are modernizing our infrastructure to further support our strategy and pursue greater operational efficiencies by enhancing our supply chain and technological foundation. The first phase of our end-to-end supply chain transformation is underway with the construction of our Northeast Distribution Center. As part of this endeavor, we are currently finalizing an agreement with a third-party logistics partner to begin establishing our new store replenishment approach. We've made progress towards reinventing our financial, inventory management, and merchandising capabilities through our technology transformation. We selected Oracle as our enterprise resource planning provider last quarter, and the next component of our IT roadmap is progressing with the appropriate designing and planning for our full ERP migration. We're making great strides in all aspects of our transformation, and customers are also recognizing the evolution. Our active customer base increased sequentially versus last quarter. Even more exciting, half of these active customers are shopping omni and digital, double 2019 levels. These customers shop more frequently and with a larger basket size. we're also paving the way for a market share rebound. In Q1, we recaptured market share on a year-over-year basis with significant gains in our key categories of bed, bath, and kitchen. We also experienced sequential monthly improvement, particularly in the bed category. As our results show, we have made meaningful progress with our transformation in just the first quarter of our three-year journey. We have confidently achieved each milestone along our transformation thus far, and I must thank our team of incredible associates for their work in defining and driving these results. We are a stronger, more agile company than ever before, and we are well on our way to building long-term growth and unlocking greater shareholder value. I will now turn the call over to Gustavo Arnal, our Chief Financial Officer, to review both our strong first quarter results and our outlook for the second quarter and revised full year. Gustavo?