Bed Bath & Beyond, Inc.

Thank you for joining us and welcome to the Q2 2026 Bed Bath & Beyond, Inc. Earnings Conference Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Melissa Smith, General Counsel and Corporate Secretary. Melissa, please go ahead.

Thank you, operator. Good afternoon, and 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 Limonis, President Amy Sullivan, Chief Financial Officer Brian LaRose, Chief Technology Transformation Officer, Kyla Robinson, and Chief Operating Officer, Lisa Foley. Today's discussion and our responses to your questions reflect management's views as of today, August 4, 2026, and they 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, thought 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, and 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, and 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 omnichannel 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. But 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 homeownership. 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 homeownership 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 value, planned 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. But 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. But the brand should not have to recreate the same infrastructure, same SG&A, and the same overhead over and 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 delivered to a doorstep to being experts in storage, organization, installation, and changed the relationship with the customer. At Kirkland's, it brought us global sourcing, designed an understanding how to create value through home decor. But what it gave us the most was the ability to understand the margin possibilities through design and international sourcing.