Bed Bath and Beyond 2Q16 Earnings Call Notes

Bed Bath & Beyond’s (BBBY) CEO Steven Temares on Q2 2016 Results

Democratization of shopping

“As retail continues to evolve, there’s been a democratization of shopping enabled by technology and the Internet, which has resulted in an ongoing shift in the way the customer shops. We now have more choices, more transparency and more convenience than ever, all resulting in significant investments in technology and dramatic shifts in the retail landscape highlighted by both new shopping options on one end, and retailer consolidation and closing the website and stores on the other.”

Databases about thousands of college dorms

“Our associates and our website have valuable information regarding thousands of U.S. colleges and in many cases, the details about select dorms on campus. We also produced our first student life catalog that was mailed in June to a targeted distribution of incoming college freshmen.”

Transitional time for retail

“It’s a transitional time for retail and many retailers including us are experiencing pressure on their operating margins. Despite the fact that we continue to achieve among the highest profit margins in retail we too have experienced downward pressures on our financial results as our transformation continues.”

e-commerce is a core category for us

“But when you talk about noncore categories, Alan, we wouldn’t all e-commerce our noncore category. E-commerce is a core category for us. I mean again, how we reach the customer, how we do more with the customer, how do we satisfy the customer, the digital experience is part of the entire experience, and we have to be great at it.”

Seeing wage pressures

“We did call out in order of magnitude payroll related expenses for Q2 that’s similar to the increase that we saw in Q1 as well. And we believe payroll and wage pressure will continue. We’re not immune to it; it’s impacting our broader workforce including all of retail. It’s also something that we seeing as you pointed out seeing a more than one year impact that there are scheduled increases depending upon the state or the city or the county for multiple years out.”

Sue Latman

Gross margin deleverage

“We are modeling our cost sales change to be in a range of relatively flat to 1% increase for fiscal 2016 with the net sales increase to be about 125 basis point to 140 basis points higher than the comp sales change. We are modeling gross margin de-leverage including increases in coupon expense and net direct to customer shipping expense as well as the inclusion of our modeled results for One Kings Lane.”