UNION, N.J., April 15, 2020 /PRNewswire/ -- Bed Bath & Beyond Inc. (Nasdaq: BBBY) today reported financial results for the fourth quarter of fiscal 2019 ended February 29, 2020.

"Our fourth quarter performance was consistent with the market update we provided on February 11, 2020," stated Mark Tritton, Bed Bath & Beyond's President and CEO.  "These results strengthen our resolve to continue to make the necessary, bold and broad-based changes needed to modernize our business, and give us confidence about our ability to improve on this quarterly performance."

Tritton continued, "We are executing a clear plan to manage our business efficiently and effectively through the coronavirus pandemic, prioritizing the health and safety of our customers and teams.  Our financial position and contingency plans will allow us to retain the financial flexibility to make targeted investments that will deepen our connection with our customers and rebuild our authority in the Home space.  In this time when Home is even more central to our lives and being safe at home with family is essential, Bed Bath & Beyond takes on an even more important role supporting customers and their families by making it easy to feel at home.

"I want to thank all our associates for their service to the business and to our loyal customers.  I am confident we will emerge from this challenge even stronger, given the strength of our brand, our people and our balance sheet."

Fiscal 2019 Fourth Quarter Results

For the fiscal 2019 fourth quarter, the Company reported a net loss of $(0.53) per diluted share ($(65.4) million), which included several special items such as severance costs, non-cash impairment charges related to certain store level assets and tradenames, and a loss on a sale-leaseback transaction.  This compares to a net loss of $(1.92) per diluted share ($(253.8) million) for the fiscal 2018 fourth quarter, which included special items such as a non-cash goodwill and tradename impairment charge.  Excluding these special items from both quarters, the Company reported adjusted net earnings of $0.38 per diluted share ($46.9 million) for the fiscal 2019 fourth quarter, and adjusted net earnings of $1.20 per diluted share ($158.8 million) for the fiscal 2018 fourth quarter.  Net sales for the fiscal 2019 fourth quarter were $3.1 billion, a decrease of 6.1% compared to the prior year period.  Comparable sales in the fiscal 2019 fourth quarter declined 5.6%.

The Company's fiscal 2019 fourth quarter was favorably impacted by the Cyber Monday holiday week, which occurred during the fourth quarter this year, but occurred in the Company's third quarter in the prior year period.  Adjusting for the calendar shift to exclude Cyber Monday week in both periods, comparable sales for the fiscal 2019 fourth quarter declined 11.0%.

Fiscal 2019 Full Year Results

For the fiscal 2019 full year, the Company reported a net loss of $(4.94) per diluted share ($(613.8) million), which included several special items such as non-cash impairment charges related to goodwill, tradenames, and certain store level assets, severance costs, shareholder activity costs, an incremental charge for markdowns associated with the Company's inventory reduction initiative, and a loss on a sale-leaseback transaction, compared with a net loss of $(1.02) per diluted share ($(137.2) million) for the fiscal 2018 full year, which included several special items such as non-cash goodwill and tradename impairment charges, severance costs, and a gain on the sale of a building.  Excluding these special items from both years, the Company reported adjusted net earnings of $0.46 per diluted share ($57.3 million) for the fiscal 2019 full year, and adjusted net earnings of $1.97 per diluted share ($264.8 million) for the fiscal 2018 full year.  Net sales for the fiscal 2019 full year were $11.2 billion, a decrease of 7.2% compared to the prior year period.  Comparable sales for the fiscal 2019 full year declined 6.8% compared to the prior year period.

Financial Position Update

During the fiscal 2019 fourth quarter, the Company did not undertake any open market share repurchase activity.

The Company ended fiscal 2019 with approximately $1.4 billion in cash and investments, an increase of approximately 39%, compared with approximately $1.0 billion in cash and investments at the end of fiscal 2018.

Retail inventories of $2.0 billion (at cost) reflected a reduction of approximately 20% or $516 million (at cost), during the fiscal 2019 fourth quarter, compared to the end of the prior year period.  Excluding the incremental charge for markdowns associated with the Company's inventory reduction initiative, adjusted retail inventories of $2.1 billion (at cost) reflected a reduction of approximately 16% or over $400 million (at cost), at the end of the fiscal 2019 fourth quarter, compared to the end of the prior year period.

COVID-19 Response Update

On April 2, 2020, Bed Bath & Beyond extended the temporary closure of all its retail banner stores across the US and Canada, other than buybuy BABY and Harmon Face Values stores, until May 2, 2020.  In conjunction with this decision, the Company announced it would implement additional cost reductions, including a furlough of the majority of store associates and a portion of corporate associates until at least May 2, 2020, a temporary reduction in salaries of the Company's executive team by 30%, and a temporary reduction in the quarterly cash compensation of the independent directors of the Board by 30%.

The Company also modified its previously announced capital allocation plans as a result of the significant uncertainty related to the COVID-19 pandemic.  The Company has taken or plans to take the following further actions while managing this period of business disruption:

  • Elected to draw down the additional funds ($236 million) remaining from its revolving credit agreement, in an abundance of caution and as a proactive measure;
  • Suspended prior plans to spend up to $600 million in fiscal 2020 for share repurchases, future dividends, and debt reduction;
  • Postponed approximately $150 million in planned capital expenditures out of fiscal 2020, including some store remodels;
  • Reduced discretionary spend such as business travel, advertising and expense associated with the maintenance of stores that are temporarily closed;
  • Renegotiating extensions of payment terms for goods and services, and rent;
  • Managing to lower inventory levels;
  • Implementing applicable benefits of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), such as deferring employer payroll taxes and utilizing the ability to carry back and deduct losses to offset prior income in previously filed tax returns; and
  • Prioritizing approximately $250 million in essential capital expenditures to drive strategic growth plans, including investments in digital and Buy Online Pick Up In Store (BOPIS).

Outlook

The Company's first quarter and full-year 2020 results will be unfavorably impacted by the COVID-19 pandemic. The duration and extent of the pandemic is highly uncertain, and Bed Bath & Beyond's results could be impacted in ways that are difficult to predict today.  Due to the level of market uncertainty, the Company will not provide further financial guidance for fiscal 2020 at this time.

Fiscal 2019 Fourth Quarter Conference Call and Investor Presentation

Bed Bath & Beyond Inc.'s fiscal 2019 fourth quarter conference call with analysts and investors will be held today at 5:00pm ET and may be accessed by dialing 1-888-424-8151, or if international, 1-847-585-4422, using passcode ID number 6105417#.  A replay of the call will be available today at 8:00pm ET through 8:00pm ET on Friday, April 17th, and can be accessed by dialing 1-888-843-7419, using passcode ID number 6105417#.  The call and replay can also be accessed via audio webcast on the investor relations section of the Company's website at www.bedbathandbeyond.com.

The Company has also made available an Investor Presentation on the investor relations section of the Company's website at www.bedbathandbeyond.com.

About the Company

Bed Bath & Beyond Inc. and subsidiaries (the "Company") is an omnichannel retailer that makes it easy for its customers to feel at home.  The Company sells a wide assortment of domestics merchandise and home furnishings.  The Company also provides a variety of textile products, amenities and other goods to institutional customers in the hospitality, cruise line, healthcare and other industries.  Additionally, the Company is a partner in a joint venture which operates retail stores in Mexico under the name Bed Bath & Beyond.

The Company operates websites at bedbathandbeyond.com, bedbathandbeyond.ca, worldmarket.com, buybuybaby.com, buybuybaby.ca, christmastreeshops.com, andthat.com, harmondiscount.com, facevalues.com, personalizationmall.com, decorist.com, harborlinen.com, and t-ygroup.com.  As of February 29, 2020, the Company had a total of 1,500 stores, including 976 Bed Bath & Beyond stores in all 50 states, the District of Columbia, Puerto Rico and Canada, 261 stores under the names of World Market, Cost Plus World Market or Cost Plus, 126 buybuy BABY stores, 81 stores under the names Christmas Tree Shops, Christmas Tree Shops andThat! or andThat!, 53 stores under the names Harmon, Harmon Face Values or Face Values, and three stores under the name One Kings Lane.  During the fiscal fourth quarter, the Company opened two buybuy BABY stores.  Also, during the fiscal fourth quarter, the Company closed 26 stores including, 17 Cost Plus World Market stores, five Bed Bath & Beyond stores, two buybuy BABY stores, and two Harmon Face Values stores.  The joint venture to which the Company is a partner operates ten stores in Mexico under the name Bed Bath & Beyond.

Non-GAAP Information

This press release contains certain non-GAAP information, such as adjusted net earnings per diluted share, which is intended to provide visibility into the Company's core operations by excluding the effects of the goodwill and other impairments, severance costs, shareholder activity costs, an incremental charge for markdowns associated with the Company's inventory reduction initiative, a loss on a sale-leaseback transaction, and a gain on the sale of a building.  The Company's definition and calculation of non-GAAP measures may differ from that of other companies.  Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company's reported GAAP financial results.

Forward-Looking Statements

This press release contains forward-looking statements, including, but not limited to, the Company's plans in response to the novel coronavirus (COVID-19).  Many of these forward-looking statements can be identified by use of words such as may, will, expect, anticipate, approximate, estimate, assume, continue, model, project, plan, goal, and similar words and phrases, although the absence of those words does not necessarily mean that statements are not forward-looking.  The Company's actual results and future financial condition may differ materially from those expressed in any such forward-looking statements as a result of many factors.  Such factors include, without limitation: general economic conditions including the housing market, a challenging overall macroeconomic environment and related changes in the retailing environment; risks associated with COVID-19 and the governmental responses to it, including its impacts across the Company's businesses on demand and operations, as well as on the operations of the Company's suppliers and other business partners, and the effectiveness of the Company's actions taken in response to these risks; consumer preferences, spending habits and adoption of new technologies; demographics and other macroeconomic factors that may impact the level of spending for the types of merchandise sold by the Company; civil disturbances and terrorist acts; unusual weather patterns and natural disasters; competition from existing and potential competitors across all channels; pricing pressures; liquidity; the ability to achieve anticipated cost savings, and to not exceed anticipated costs, associated with organizational changes and investments; the ability to attract and retain qualified employees in all areas of the organization; the cost of labor, merchandise and other costs and expenses; potential supply chain disruption due to trade restrictions, and other factors such as natural disasters, such as pandemics, including the COVID-19 pandemic, political instability, labor disturbances, product recalls, financial or operational instability of suppliers or carriers, and other items; the ability to find suitable locations at acceptable occupancy costs and other terms to support the Company's plans for new stores; the ability to establish and profitably maintain the appropriate mix of digital and physical presence in the markets it serves; the ability to assess and implement technologies in support of the Company's development of its omnichannel capabilities; the ability to effectively and timely adjust the Company's plans in the face of the rapidly changing retail and economic environment, including in response to the COVID-19 pandemic; uncertainty in financial markets; volatility in the price of the Company's common stock and its effect, and the effect of other factors, including the COVID-19 pandemic, on the Company's capital allocation strategy; risks associated with the ability to achieve a successful outcome for its business concepts and to otherwise achieve its business strategies; the impact of intangible asset and other impairments; disruptions to the Company's information technology systems including but not limited to security breaches of systems protecting consumer and employee information or other types of cybercrimes or cybersecurity attacks; reputational risk arising from challenges to the Company's or a third party product or service supplier's compliance with various laws, regulations or standards, including those related to labor, health, safety, privacy or the environment; reputational risk arising from third-party merchandise or service vendor performance in direct home delivery or assembly of product for customers; changes to statutory, regulatory and legal requirements, including without limitation proposed changes affecting international trade; changes to, or new, tax laws or interpretation of existing tax laws; new, or developments in existing, litigation, claims or assessments; changes to, or new, accounting standards; and foreign currency exchange rate fluctuations.  The Company does not undertake any obligation to update its forward-looking statements.

 

BED BATH & BEYOND INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)



Three Months Ended


Twelve months ended


February 29, 2020


March 2, 2019


February 29, 2020


March 2, 2019









Net sales

$

3,106,822



$

3,307,881



$

11,158,580



$

12,028,797










Cost of sales

2,093,166



2,161,020



7,616,920



7,924,817










    Gross profit

1,013,656



1,146,861



3,541,660



4,103,980










Selling, general and administrative expenses

1,027,041



933,691



3,732,498



3,681,210










Goodwill and other impairments

67,821



509,905



509,226



509,905










    Operating loss

(81,206)



(296,735)



(700,064)



(87,135)










Interest expense, net

15,370



15,440



64,789



69,474










    Loss before provision for income taxes

(96,576)



(312,175)



(764,853)



(156,609)










Benefit for income taxes

(31,162)



(58,382)



(151,037)



(19,385)










    Net loss

$

(65,414)



$

(253,793)



$

(613,816)



$

(137,224)










Net loss per share - Basic

$

(0.53)



$

(1.92)



$

(4.94)



$

(1.02)


Net loss per share - Diluted

$

(0.53)



$

(1.92)



$

(4.94)



$

(1.02)










Weighted average shares outstanding - Basic

123,347



131,958



124,352



134,292


Weighted average shares outstanding - Diluted

123,347



131,958



124,352



134,292










Dividends declared per share

$

0.17



$

0.16



$

0.68



$

0.64


 

 

BED BATH & BEYOND INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands, except per share data)

(unaudited)



February 29, 2020


March 2, 2019

Assets








Current assets:




    Cash and cash equivalents

$

1,000,340



$

508,971


    Short term investment securities

385,642



485,799


    Merchandise inventories

2,093,869



2,618,922


    Prepaid expenses and other current assets

248,342



296,280


    Assets held-for-sale

98,092



—






        Total current assets

3,826,285



3,909,972






Long term investment securities

20,380



20,010


Property and equipment, net

1,430,604



1,853,091


Operating lease assets

2,006,966



—


Goodwill

—



391,052


Other assets

506,280



396,416







$

7,790,515



$

6,570,541






Liabilities and Shareholders' Equity








Current liabilities:




    Accounts payable

$

944,194



$

1,094,078


    Accrued expenses and other current liabilities

675,776



623,734


    Merchandise credit and gift card liabilities

340,407



339,322


    Current operating lease liabilities

463,005



—


    Liabilities related to assets held-for-sale

43,144



—


    Current income taxes payable

—



20,498






        Total current liabilities

2,466,526



2,077,632






Other liabilities

204,926



395,409


Income taxes payable

46,945



49,235


Operating lease liabilities

1,818,783



—


Long term debt

1,488,400



1,487,934






        Total liabilities

6,025,580



4,010,210






Shareholders' equity:








Preferred stock - $0.01 par value; authorized - 1,000 shares; no shares issued or outstanding

—



—






Common stock - $0.01 par value; authorized - 900,000 shares; issued 343,683 and 342,582 shares, respectively; outstanding 126,528 and 132,233 shares, respectively

3,436



3,426


Additional paid-in capital

2,167,337



2,118,673


Retained earnings

10,374,826



11,112,887


Treasury stock, at cost; 217,155 and 210,349 shares, respectively

(10,715,755)



(10,616,045)


Accumulated other comprehensive loss

(64,909)



(58,610)






Total shareholders' equity

1,764,935



2,560,331







$

7,790,515



$

6,570,541


 

 

BED BATH & BEYOND INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(in thousands, unaudited)



Twelve months ended


February 29, 2020


March 2, 2019

Cash Flows from Operating Activities:








    Net loss

$

(613,816)



$

(137,224)


    Adjustments to reconcile net loss to net cash provided by operating activities:




        Depreciation and amortization

342,511



338,825


        Gain on sale of a building

—



(29,690)


        Loss on sale-leaseback transaction

27,357



—


        Goodwill and other impairments

509,226



509,905


        Gain on debt extinguishment

—



(412)


        Stock-based compensation

45,676



58,514


        Deferred income taxes

(145,543)



(104,089)


        Other

(3,446)



(814)


        Decrease (increase) in assets:




           Merchandise inventories

506,334



106,928


           Trading investment securities

21



86,277


           Other current assets

(4,781)



269,186


           Other assets

218



218


        (Decrease) increase in liabilities:




           Accounts payable

(124,206)



(90,657)


           Accrued expenses and other current liabilities

61,864



(77,147)


           Merchandise credit and gift card liabilities

1,154



16,016


           Income taxes payable

(22,783)



8,360


           Operating lease assets and liabilities, net

(2,899)



—


           Other liabilities

14,054



(35,918)






    Net cash provided by operating activities

590,941



918,278






Cash Flows from Investing Activities:








    Purchase of held-to-maturity investment securities

(443,500)



(734,424)


    Redemption of held-to-maturity investment securities

545,000



538,925


    Capital expenditures

(277,401)



(325,366)


    Proceeds from sale-leaseback transaction

267,277



—


    Proceeds from sale of land and building

—



11,183






    Net cash provided by (used in) investing activities

91,376



(509,682)






Cash Flows from Financing Activities:








    Payment of dividends

(85,482)



(86,287)


    Repurchase of common stock, including fees

(99,710)



(148,073)


    Payment of senior notes

—



(4,224)


    Proceeds from exercise of stock options

2,346



—






    Net cash used in financing activities

(182,846)



(238,584)






    Effect of exchange rate changes on cash, cash equivalents and restricted cash

(977)



(7,181)






    Net increase in cash, cash equivalents and restricted cash, including cash balances classified as assets held-for-sale

 

498,494



162,831


    Less: Cash balances classified as assets-held-for-sale

(4,815)



—


    Net increase in cash, cash equivalents and restricted cash

493,679



162,831






Cash, cash equivalents and restricted cash:




    Beginning of period

529,971



367,140


    End of period

$

1,023,650



$

529,971

Non-GAAP Financial Measures

The following table reconciles non-GAAP financial measures presented in this press release or that may be presented on the Company's fourth quarter conference call with analysts and investors.  The Company believes that these non-GAAP financial measures provide management, analysts, investors and other users of the Company's financial information with meaningful supplemental information regarding the performance of the Company's business.  These non-GAAP financial measures should not be considered superior to, but in addition to other financial measures prepared by the Company in accordance with GAAP, including the year-to-year results.  The Company's method of determining these non-GAAP financial measures may be different from other companies' methods and, therefore, may not be comparable to those used by other companies and the Company does not recommend the sole use of this non-GAAP measure to assess its financial and earnings performance.  For reasons noted above, the Company is presenting certain non-GAAP financial measures for its fiscal 2019 fourth quarter.  In order for investors to be able to more easily compare the Company's performance across periods, the Company has included comparable reconciliations for the 2018 period in the reconciliation tables below.

Non-GAAP Reconciliation

(in thousands, except per share data)

(unaudited)




Three Months Ended


Twelve Months Ended



February 29, 2020


March 2, 2019


February 29, 2020


March 2, 2019

Reconciliation of Adjusted Gross Profit


















Reported gross profit


$

1,013,656



$

1,146,861



$

3,541,660



$

4,103,980











Adjustments:









Incremental charge for markdowns


—



—



169,820



—


Total adjustments


—



—



169,820



—











Adjusted gross profit


$

1,013,656



$

1,146,861



$

3,711,480



$

4,103,980











Reconciliation of Adjusted Gross Margin


















Reported gross margin


32.6

%


34.7

%


31.7

%


34.1

%










Adjustments:









Incremental charge for markdowns


—

%


—

%


1.6

%


—

%

Total adjustments


—

%


—

%


1.6

%


—

%










Adjusted gross margin


32.6

%


34.7

%


33.3

%


34.1

%










Reconciliation of Adjusted Selling, General and Administrative Expenses














Reported selling, general and administrative expenses


$

1,027,041



$

933,691



$

3,732,498



$

3,681,210











Adjustments:









Severance costs


(41,308)



—



(102,507)



(13,892)


Shareholder activity costs


—



—



(8,000)



—


Loss from sale-leaseback transaction, including transaction fees


(32,840)



—



(32,840)



—


Gain on sale of a building


—



—



—



28,281


Total adjustments


(74,148)



—



(143,347)



14,389











Adjusted selling, general and administrative expenses


$

952,893



$

933,691



$

3,589,151



$

3,695,599






















Three Months Ended


Twelve Months Ended



February 29, 2020


March 2, 2019


February 29, 2020


March 2, 2019










Reconciliation of Adjusted Selling, General and Administrative Expenses as a Percent of Net Sales












Reported selling, general and administrative expenses as a percent of net sales


33.1

%


28.2

%


33.4

%


30.6

%










Adjustments:









Severance costs


(1.3)

%


—

%


(0.9)

%


(0.1)

%

Shareholder activity costs


—

%


—

%


—

%


—

%

Loss from sale-leaseback transaction, including transaction fees


(1.1)

%


—

%


(0.3)

%


—

%

Gain on sale of a building


—

%


—

%


—

%


0.2

%

Total adjustments


(2.4)

%


—

%


(1.2)

%


0.1

%










Adjusted selling, general and administrative expenses as a percent of net sales


30.7

%


28.2

%


32.2

%


30.7

%










Reconciliation of Adjusted Effective Income Tax Rate












Reported effective income tax rate


32.3

%


18.7

%





Impact on operating loss and benefit for income taxes of goodwill and other impairments, severance costs, and loss from sale-leaseback transaction, including transaction fees


(35.6)

%


1.0

%





Adjusted effective income tax rate


(3.3)

%


19.7

%














Reconciliation of Adjusted Net (Loss) Earnings


















Reported net (loss) earnings


$

(65,414)



$

(253,793)



$

(613,816)



$

(137,224)











Pre-tax Adjustments:









Incremental charge for markdowns


—



—



169,820



—


Severance costs


41,308



—



102,507



13,892


Goodwill and other impairments (a)


67,821



509,905



509,226



509,905


Shareholder activity costs


—



—



8,000



—


Loss from sale-leaseback transaction, including transaction fees


32,840



—



32,840



—


Gain on sale of a building


—



—



—



(28,281)


Total pre-tax adjustments


141,969



509,905



822,393



495,516











Tax impact of adjustments


(29,666)



(97,286)



(151,231)



(93,456)











Total adjustments, after tax


112,303



412,619



671,162



402,060











Adjusted net (loss) earnings


$

46,889



$

158,826



$

57,346



$

264,836











Reconciliation of Adjusted Net (Loss) Earnings per Diluted Share
















Reported net (loss) earnings per diluted share


$

(0.53)



$

(1.92)



$

(4.94)



$

(1.02)


Goodwill and other impairments, severance costs, shareholder activity costs, incremental charge for markdowns, loss on sale-leaseback transaction, including transaction fees and gain on sale of a building


0.91



3.12



5.40



2.99


Adjusted net (loss) earnings per diluted share


$

0.38



$

1.20



$

0.46



$

1.97




(a)

Goodwill and other impairments include: (1) goodwill, tradename, store asset and other impairments related to the North American Retail reporting unit; and (2) tradename impairments related
to the Institutional Sales reporting unit.

 

 

 

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SOURCE Bed Bath & Beyond Inc.

Copyright 2020 PR Newswire

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