Bed Bath & Beyond, Inc.

Thank you, operator. Good afternoon, and welcome to FedBath and Beyond, Inc.' 's third quarter 2025 earnings conference call. Joining me on the call today are executive chairman and principal executive officer, Marcus Limonis, and president and chief financial officer, Adrienne Lee. I'm also joined by Alex Thomas, chief operating officer. Today's discussion and our responses to your questions reflect management's views as of today, October 27, 2025, and may include forward-looking statements, including without limitation, statements regarding our quarterly earnings reporting, forecasts of and plans for our growth, revenue improvement, profitability or sustained profitability, business strategy, including plans for enhancing customer and shopping experience, our long-term goal of becoming the everything home company, margin consistency, improved conversion, expected conversions of retail locations, planned expense reductions, value and monetization of our intellectual property, future strategic ventures, including in prop tech solutions, improved financial performance, progress of and plans for the platforms we invest in, plans for improved efficiencies and technology-based solutions, including AI-driven strategies, and timing of any of the foregoing. Actual results could differ materially from such statements. Additional information about risks, uncertainties, and other important factors that could potentially impact our financial results is included in our Form 10-K for the year ended December 31, 2024, our Form 10-Q for the fiscal period ended September 30, 2025, and in our subsequent filings with the SEC. During this call, we'll discuss certain non-GAAP financial measures. Our filings with the SEC, including our third 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. Geez, I feel like we took the whole time to do the disclosures, but good afternoon, everyone, and thank you for joining us for the third quarter call. As many are aware, consumer confidence and spending patterns, they remain uneven. But we continue to outperform our own expectations by staying disciplined, focused, and very customer-centric. During the quarter, we completed our name change back to Bed Bath & Beyond, a brand that continues to hold deep connection and trust with consumers across homes. The third quarter marked another strong step forward for Bed Bath & Beyond, our seventh consecutive quarter of measurable improvement towards achieving profitability. We've stabilized the business and are positioned it for growth. Year over year, we delivered a 93% improvement in net loss and an 85% improvement in adjusted EBITDA, a 420 basis point increase in gross margin, driven by disciplined execution, sharper focus, and much smarter spending. We know what's working, and we also know what still needs improvement. Ahead, we'll place greater emphasis on data-driven decisions, faster technology, and customer-focused, solution-based experiences. As we enhance our technology and analytics team, we're combining top internal talent with external experts. and auditing every part of the customer journey to ensure personalized solicitation, discovery, checkout, and post-purchase experiences to deliver the conversion and retention our financial model requires. During the quarter, we strengthened our foundation. We invested an additional $3 million in GrainChain, our blockchain-based supply chain platform, acquired the Kirkland's Home intellectual property for $10 million, adding another trusted home brand to our family, and raised approximately $113 million through our ATF. We're using this liquidity to strengthen the balance sheet, expand existing investments, and pursue strategic investments or acquisitions in non-retail, home-centric technology, data, products, services, and select prop tech solutions. all aim at building out our everything home business. Homeowners today need simple, innovative technology to help them maintain their homes, manage projects, and realize the full potential of their property, including a personalized, frictionless shopping experience. Over time, we see PropTech playing a growing role in how consumers maintain, finance, and optimize their homes, and how we help them unlock more value from where they live. Across the business, execution is improving, and the results reflect it. We've also continued to invest in the platform shaping our future. Both T-Zero and GrainChain are making steady progress. At T-Zero, over the last several months, we've driven the kind of change we expect. New leadership, a sharper outlook, and as of today, an acknowledgement that pursuing a public market listing could unlock new value. While T-Zero has multiple growth paths, our focus is on its ability to unlock value for asset managers and homeowners. Fractional ownership, digital transparency, and verified title records can reshape how people access and invest in property, directly supporting our Everything Home mission. GrainChain continues to advance as a blockchain platform, modernizing supply chains tied to home-related commerce. It improves transparency and efficiency across materials, logistics, and finished goods, strengthening trust across the ecosystem that builds and furnishes the home. Together, T-Zero and GrainChain connect the digital and physical worlds, enhancing transparency, ownership, and value creation. Alongside these efforts, PropTech will help integrate the home itself into this ecosystem. linking ownership, supply chain, and consumer experience in a way that's unique to Bed Bath & Beyond. With that, I'll turn the call over to Adrienne to review the results.

Thank you, Marcus. We are proud of the progress this quarter. Our focus on execution, efficiency, and balance sheet strength continues to deliver results. Net revenue was $257 million for the third quarter, down 17% year-over-year, or 13%, excluding the impact from our exit from Canada. Average order value improved 3%, driven by our continued focus on assortment, removing unproductive SKUs and leaning into better best offering. This was partially offset by lower orders. However, I am pleased orders were nearly flat versus the second quarter, highlighting business stability. Gross margin was 25.3%, up 420 basis points year over year, driven by lower fulfillment and returns costs and tighter promotions. Sales and marketing expense improved by 260 basis points, to 14% of revenue, reflecting a more efficient channel allocation and improved return on spend. Notably, our efficiency has been relatively consistent throughout 2025, which makes it a good place to take additional steps towards improved efficiencies. This month, we launched a new private label credit card as an important retention tool step. Technology and G&A expense declined by $13 million year-over-year as we right-sized our org structure, streamlined vendors, and automated key functions. All in, net loss narrowed to $4.5 million, a 93% improvement year-over-year, and adjusted EBITDA loss of $4.9 million improved 85%. We ended the quarter with $202 million in cash, equivalents, and inventory, plus $6 million from ATM settlements post-quarter end. We believe our improved balance sheet provides stability and flexibility for the future. Operationally versus a year ago, average order value is up. Fulfillment costs and returns are down. Marketing is more efficient with owned channels performing better and fixed costs are down. All early signs that our digital and operational work is paying off. With that, I'll turn it back to Marcus for closing remarks and our view on 2026.