Welcome to the Bed Bath & Beyond's Fiscal 2018 Fourth Quarter and Year-End Earnings Call. All participants will be in a listen-only mode until the Q&A portion of the call. Today's conference call is being recorded. A rebroadcast of the conference call will be available beginning on Wednesday, April 10, 2019, at 8:00 PM Eastern Time to 8:00 PM Eastern Time on Friday, April 12, 2019. To access the rebroadcast, you may dial 888-843-7419 with the passcode ID of 48430411. At this time, I'd like to turn the conference over to Janet Barth, Vice President, Investor Relations. Please go ahead.

Thank you, Adrianne; and good afternoon, everyone. Before we begin, I want to remind you that our fiscal 2018's fourth quarter earnings release and slide presentation can be found in the Investor Relations section of our website at www.bedbathandbeyond.com, and as exhibits to a Form 8-K we filed just ahead of this call. Feel free to access these materials now, while I continue with our introduction. Joining me on our call today are Steven Temares, Bed Bath & Beyond's Chief Executive Officer and Member of the Board of Directors; Robyn D'Elia, our Chief Financial Officer and Treasurer; Gene Castagna, President and Chief Operating Officer; and Sue Lattmann, our Chief Administrative Officer. Let me remind you that this conference call and the slides we refer to may contain forward-looking statements, including statements about or references to 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. The company undertakes no obligation to update or revise any forward-looking statements. Here are some highlights. Our adjusted fiscal fourth quarter and full year 2018 net earnings per diluted share of $1.20 and $2.05, respectively, were both slightly higher than our model. As we mentioned during our call last quarter, we had to review our goodwill and other intangible assets during the fiscal fourth quarter, as required by the accounting rules to determine if the carrying value of these assets needed to be adjusted. Due in large part to the market cap of the company, we have adjusted the carrying value of these assets, which generated a pre-tax non-cash impairment expense. Please refer to the reconciliation table at the end of our press release for further details. Our net sales in the quarter declined approximately 11%, primarily due to having one less week in the quarter and the shift of the post Thanksgiving holiday sales week out of our fourth quarter. Our comp sales, which compares the same year-over-year calendar weeks, declined approximately 1.4% in the fourth quarter and we continue to manage the business with a bias toward driving profitability improvement over near term sales growth. Our ongoing focus on inventory optimization strategies resulted in a nearly 5% reduction in our retail inventory to cost. We ended the year with approximately $1 billion in cash and investments, which is approximately 35% more than the amount of cash and investments we had at the end of fiscal 2017. Overall, we performed in line with our fiscal 2018 model and are pleased that our transformational initiatives are starting to take hold. We're now modeling 2019 net earnings per diluted share to grow slightly. In 2020, at long term, we expect to achieve double-digit growth rates in net earnings per diluted share. During our call today, Steven will give an update on the progress of our transformation, share examples of where we are already seeing meaningful results. And then give some visibility to our longer term road map. Then Robyn will review our fiscal 2018 financial results in more detail and provide our modeling assumptions for fiscal 2019, as well as some longer term financial targets. We will then open the call for questions. I want to let you know in advance that we will not address questions related to the recent shareholder activity. Since the purpose of today's call is to discuss our financial results for fiscal 2018, to provide an update on our transformation and discuss our outlook for fiscal 2019 in long term, we'd be happy to answer questions focused on these topics. I'll now turn the call over to Steven.

Thank you, Janet. As you know, we are in the midst of a comprehensive plan to transform our business, position our company for ongoing success and generate value. We understand what it takes to compete and succeed in a dynamic marketplace and for retail cycles. We've undertaken enormous change to adapt to the environment and our customer needs and to improve our competitive position. Our transformation began some 18 months ago and comprises a thorough overhaul of much of what we do to deliver on our commitment to improve revenue growth, enhanced gross and operating margins, and create sustainable shareholder value. We have been driving significant foundational change across our business. A lot of progress has been made operationally, which is beginning to reflect in our financial results. This has been a dedicated effort across our organization leveraging both internal resources and the perspectives of third-party consultants. Today, we will provide you with a comprehensive view of the initiatives we are executing and detailed where we are already seeing meaningful results. And then share additional visibility into our longer term road map. As we outlined a year ago, our primary financial goals for fiscal 2018 and 2019 are to moderate the declines in our operating margin and earnings per share with an expectation of returning to earnings-per-share growth by 2020 all of this while investing in the business to ensure that we remain competitive for the long term. During our last conference call in January, we told you that we were on track with our goals for 2018 and that we have seen enough traction to give us confidence that we're going to keep earnings per share flat in 2019. Recall, this was a year ahead of our previous model, and return to earnings growth in 2020. Today, we can report that not only have we met the goals that we set for 2018, but as you'll hear from Robyn, we are now planning earnings per share in fiscal 2019 to be slightly ahead of 2018 with acceleration thereafter. The foundational initiatives that we have been focused on are intended to drive four key objectives, mid- and long term revenue growth, near term and ongoing gross margin improvements, near term and ongoing SG&A improvements, and current and sustainable world-class operational support. The pace of our transformation accelerated during fiscal 2018 and we made measurable progress in each of these four focus areas of our plan. Our efforts to drive mid and long term revenue growth is centered on several initiatives. Concept strategy, which includes a greater focus on growing the destinational categories in our assortment, including bed, bath, kitchen, windows and tabletop, and growing our meaningfully differentiated products including proprietary brands. Our Next Generation Lab stores where we're testing a variety of experiences and visual merchandising to enhance our customer experience; front-end optimization, which supports a better customer experience across our digital channels and value optimization, which supports our commitment to being priced right including competitive in markdown pricing or to drive sales while maximizing profits, enhancing our competitive place in the market and positioning us for long term growth. We believe these initiatives lay the foundation for long term revenue growth in the low single-digit percentage range. Now for some specific examples of these initiatives under way, starting with concept strategy we've completed a full product portfolio review and developed a product strategy to further align across product assortment, customer experience and customer engagement. While still early in executing the strategy, we are pleased to see our destinational categories ascend to our strongest performing product categories. For meaningfully differentiated product, last month, we've launched the first of six new private label home furnishings brand in Bed Bath & Beyond that are planned to be introduced over the course of fiscal 2019 and 2020. Bee & Willow Home consists of products across key categories such as decorative furnishings, bedding, tabletop, kitchen, home décor, rugs, candles and floral. While it is still early in the campaign, Bee & Willow categories such as bedding, area rugs and decorative accessories are performing well. In addition to a proprietary brand, we're focused on growing our preferred brands, such as UGG, in which most of our assortment is exclusive. The range of product offerings for home includes bedding, bath and home décor. With UGG strong quality and brand appeal coupled with our effective marketing campaigns and enhanced visual merchandising, both in-store and online, the brand performed very well in fiscal 2018 with $70 million in revenue growth. For 2019, we're excited to have an enhanced assortment of the UGG brand in our Back to College offering as this brand already resonates with our younger customer. Moving to next-generation lab store initiatives. During 2018, we initiated 21 next-generation lab stores in which we are testing new and different assortments and visual merchandising to reimagine the in-store experience. Some of the experiences in these lab stores include scarcity product; a greater emphasis on home décor, food and beverage and health and beauty care; improved sightlines showing collections, cross merchandising, lifestyle merchandising and queue lines as well as an even more meaningful reduction in inventory than already accomplished in the rest of our Bed Bath & Beyond stores, all to enhance the overall shopping experience. For these lab stores that have a different combination of these experiences and that have been opened for at least four weeks, our recent results show that they are outperforming similar stores in sales, transactions, margins and margin dollars. For example, over the last 4 weeks, sales in these stores are about 2.2% higher than comparable Bed Bath & Beyond stores. Transactions are higher by about 3.7%, product margin dollars are higher by 3.6% and the product margin rate is slightly higher by 50 basis points. For the same period, these lab stores are also achieving inventory reductions approximately 7% better than the inventory reductions already being achieved by comparable stores. We're excited about our next-generation lab store initiatives. To be clear, the learnings from these lab stores will be refined and scaled into additional stores to accelerate sales and enhance margins. And we've already started rolling out some of the learnings to additional stores, such as queue lines and increasing sightlines, which can be done fairly quickly and at a relatively low cost. For front-end optimization, we're also excited by the results of this initiative which was completed last fall and involved the re-platforming of Bed Bath & Beyond and buybuy BABY's digital channels with a new service-based architecture and responsive design to allow for a faster and more cost-effective implementation of features across these 2 web and mobile channels. The performance of these websites has been enhanced, including improved page load performance. And we introduced a cleaner, more contemporary website design. As mentioned, another benefit to FEO is the speed of which we can now release new features and experiences to the websites, moving from monthly to weekly releases post-FEO and moving towards daily. We're also benefiting from a lower development cost through automation as well as no longer having to write separate code to develop experiences for each channel. At the same time, we have seen growth in conversion post-FEO for bedbathandbeyond.com and buybuybaby.com in the United States. We experienced a combined year-over-year growth rate in conversion in the mid-single-digit percentage range. And last, value optimization. Through our investment in people and systems, we are furthering our efforts to assure that our customers are getting the right value for the products they want and need most. We have built a group, embedded the people and teams with our buyers, planners, category managers and product development item, vendors and supply chain specialists and now have the people and systems in place to optimize our initial competitive and markdown pricing to drive more profitable sales. We have already benefited by initial work done by our group where we have adjusted pricing in some baby product categories that drove increased revenue. Our second area of focus is to drive more near-term and ongoing gross margin improvements. Through a combination of transformation initiatives as well as actions taken in managing our business with a stronger bias towards prioritizing profitability above sales growth, we are addressing gross margin deleverage and, as Robyn will discuss, are positioning our company for continued improvements. In aggregate, we believe these initiatives will contribute to overall long-term margin improvement of about 200 basis points with target margins of approximately 36%, returning to fiscal 2017 levels. It starts with merchandising the mix and driving sales to better margin categories such as many of our destinational businesses as well as our own private label and proprietary product. I already mentioned Bee & Willow and our plans to roll out five additional private label brands this year and next. And through our concept strategy and brand vision initiatives, we have plans to drive better performance of our other proprietary and preferred brands specifically in our destinational and core categories of business generally. We have also invested in enhanced analytic tools and new internal reporting capabilities that provide greater visibility to and allow us to better evaluate the profitability of our product offering by item, by channel. We're using these insights to inform various business decisions across areas such as buying, informing our marketing decisions, modifying our product recommendation engine, eliminating less profitable SKUs from our assortment, creating efficiencies with vendors, adjusting our free shipping thresholds and modifying our pricing algorithms. As an example of how we are modifying our pricing, let's take a look at some markdowns. With our new team and tools, we can now customize the timing and depth of a markdown at an item store level. One of the many examples is a recent transition of a towel program from one supplier to another. Our approach applied to this program allowed us to reduce markdowns by 11%, a savings of about $1 million, also increased sales by 16% and have a sell-through that was 5% higher. We also continued to optimize our coupon strategy through coupon exclusions, adjusting our value offers and limiting coupon availability. Of course, actions like these do have a near-term impact on sales but they are -- they benefit our overall profitability. While early, these actions are beginning to take hold, contributing to moderation in our coupon expense rate in the fourth quarter of fiscal 2018 and our plan to continue as the year progresses. Also, during fiscal 2018, we've launched a comprehensive review of our supply chain infrastructure and capabilities. We are leveraging these learnings as well as our investments in logistics software to drive continuous improvement in our supply chain to more cost effectively meet and exceed our customers' expectations today and in the future. Working with our vendor partners, we are better coordinating our shipping schedules, leading to lower inbound freight expense. For our direct-to-consumer shipments, we are seeing favorable results from actions implemented late in the fourth quarter to further optimize our packaging. In this instance, we were able to reduce outbound shipping expense by about $1 million in fiscal 2018, and we expect these savings to significantly increase as the year progresses. Our third area of focus is to drive near-term and ongoing SG&A improvements. During fiscal 2018, we took further actions to optimize our store labor model, which led to a decline in store payroll expense for the year as a percent of sales despite ongoing wage pressures. Going forward, we will continue to optimize our store labor model through the implementation of revised staffing grids; realignment of our field support structure, which was implemented last month; benefits from initiatives to reduce tasks informed by learnings from industrial engineering studies, including leveraging our assisted store ordering algorithms, a reduction in ticketing required and a reduction in returns processing due to a change in policy as well as from further utilization of our workforce management solution. In advertising, we plan to continue to improve the efficiency of our direct mail events and digital marketing as we continue to manage the business with a bias towards profitability of our near-term sales. Regarding occupancy, we have completed a comprehensive review of all our leases with the assistance of a third party and negotiations with landlords are progressing as planned. While we are investing significantly in the business to drive profitable growth and enhance our competitive position, we believe that in total, these initiatives will contribute to a long-term reduction in SG&A expense margin of approximately 100 basis points. Combined with over 200 basis points of gross margin expansion, we expect our long-term operating margin to increase by approximately 300 basis points. Moving to our fourth and final focus area, providing current and sustainable operational support. The foundational changes we have made in our investments in human capital, data and analytics and process improvements have been company changing and positioned us to be best-in-class and to deliver continuous improvement for years to come. Let me provide more detail. They substantially reconstructed our team, adding more than 20 new leaders, including many industry experts from across retail, some in newly constituted roles. And we've migrated hundreds of people into new teams as well as utilized world-class external consulting support, all to deepen our expertise for the home and thrive in an omnichannel retail environment. We are changing how we work by implementing processes, including agile teams to enable more cross-functional collaboration and drive faster decision making to enhance our results. We have established an operational support team to enable our merchants to increase their focus on a more meaningfully differentiated assortment as well as other strategic merchandising decisions. We are deeply committed to analytics and are making certain that our data is a strategic asset. We are growing and embedding analytics capabilities throughout our business to enhance decision making. We have established a multidisciplinary brand team for Bed Bath & Beyond to reposition and articulate our brand in the marketplace, including all our customer interactions across our assortment, store and digital experience and marketing and look forward to seeing these efforts manifest during the year. We have implemented enhanced systems and tools along with process improvement in our supply chain to further optimize our store fulfillment network and are rolling out others that will improve core visibility and speed of delivery to our customers. We have also enhanced our global sourcing capabilities, including the opening of a second sourcing office in Asia as part of our plan to more than triple our direct importing and sourcing for Bed Bath in the years ahead. And we have transformed our approach to developing, managing and delivering technology solutions to meet the needs of the business. Under new technology leadership and with enhanced processes, we can better identify, prioritize, resource, collaborate and deliver against our ever-increasing technology road map. To help support the growth in our IT projects, we established an India Development Center in fiscal 2018 to provide cost-effective, enhanced productivity for our IT deliverables and plan to expand our center in 2019 to leverage the additional skilled workforce in a 24-hour workday. We are pleased that much of the foundational work for our company-wide initiatives has been completed and that many of these initiatives have taken hold and are resulting in improving trends. In fiscal 2019, we will continue our efforts to position our company for long-term success. As Robyn will discuss, we are modeling our operating profit, even including the investments and initiatives to stabilize and earnings per share to grow slightly and for both to accelerate thereafter as the impact from many of our key initiatives grows, and we take advantage of the significant operating leverage of our business. In closing, we remain firmly committed to building sustainable value for our shareholders, which is why we have been undertaking such significant change and investments across our company. No doubt we are operating in a dynamic retail landscape, but we have acted and we'll continue to act with pace and thoughtfulness to transform the foundation of our entire company, to position us for long-term success. We have invested heavily in our transformation initiatives and are executing on these company-wide operational and foundational changes. We built our company from scratch to be the preeminent retailer for the home in a brick-and-mortar age. At the outset of this transformation, we embraced the challenge to transform our company to position ourselves for the same success in an omnichannel retail environment. We have done so with thoroughness and urgency. While this is a multiyear effort, our board and management team are confident that the actions underway to drive mid- and long-term revenue growth, near-term and ongoing gross margin improvement, near-term and ongoing SG&A improvement and provide current and sustainable world-class operational support will enable Bed Bath & Beyond to succeed and drive shareholder value. We look forward to updating you on our progress. Now I'll turn the call over to Robyn to review our financials and our outlook. Robyn D'Elia: Thank you, Steven. As a reminder, our fiscal 2018 was a 52-week year compared to last year, which was a 53-week year. As such, our fourth quarter consisted of 13 weeks versus 14 weeks in fiscal 2017. This calendar shift was evident in our quarterly and full year net sales. For comparison purposes, our comp sales metric compares the same year-over-year calendar weeks. As we mentioned on our call last quarter, we reviewed our goodwill and other intangible assets during the fiscal fourth quarter as required by the accounting rules to determine if the carrying value of these assets needs to be adjusted. Due in large part to the market cap of the company, we have adjusted the carrying value of these assets, which generated a pretax noncash impairment expense of approximately $510 million. Since this charge does not impact our ongoing day-to-day operations, my following comments related to our fourth quarter results and our modeling assumptions for fiscal 2019 exclude this noncash impairment charge. I will now review our fourth quarter results. Net sales in the quarter were approximately $3.3 billion, a decrease of approximately 11% compared to the fourth quarter of last year. As we expected and described during previous conference calls, our fourth quarter net sales were impacted primarily by 2 factors. First, we had one less week in the quarter; and second, there was a shift in the calendar moving the post-Thanksgiving holiday sales week out of the fourth quarter. We continue to manage the business with a bias towards driving profitability improvement over near-term sales growth. As previously described, this includes reducing some marketing, raising the Bed Bath & Beyond free shipping threshold, eliminating less profitable SKUs from the assortment and excluding coupons from certain SKUs. Comp sales for the quarter declined approximately 1.4% and reflected a decrease in a number of transactions in stores partially offset by an increase in the average transaction amount. On a directional basis for the quarter, comp sales growth from our customer-facing digital channels continued to be strong while comp sales from our stores declined in the mid-single-digit percentage range. Gross margin for the quarter was approximately 34.7% of net sales as compared to approximately 35.9% in the fourth quarter of last year. In order of magnitude, this decrease as a percentage of net sales was primarily due to a decrease in merchandise margins and an increase in coupon expense. The increase in coupon expense was the result of increases in the average coupon amount partially offset by a decrease in the number of redemptions. And as Steven mentioned earlier, the things we are doing to further optimize our coupon strategy are already having a moderating effect on the increase in our coupon expense rate. In addition, as we have previously described, our BEYOND+ membership program has and will continue to unfavorably impact our gross margin as the rate of member enrollment increases. As a reminder, the consumer-focused benefits of this program, including 20% off entire purchase and free shipping are realized immediately upon sale, while the membership fee is currently amortized over the one-year membership period. As of the end of the fourth quarter, we have approximately 1.1 million BEYOND+ members. We estimate the impact from BEYOND+ on our gross margin was approximately 60 basis points for the fourth quarter and approximately 40 basis points for the full year. Notwithstanding the short-term margin impact during this period of increasing member enrollment, we continue to evaluate the learnings, and we remain very encouraged by the incremental benefits we are seeing and the long-term potential of Bed Bath & Beyond Plus. In addition, this program is another means to gain customer insights that, over time, will allow us to direct specific product offers and content to these loyal customers through our marketing personalization to drive incremental sales and margin enhancement. SG&A for the quarter was approximately 28.2% of net sales as compared to approximately 26.8% in the prior year period. In order of magnitude, this increase in SG&A as a percentage of sales was primarily due to increases in technology-related expenses, including related depreciation and occupancy expenses and costs related to litigation settlement. These increases were partially offset by a decrease in payroll and payroll-related items and advertising expenses, which includes the benefit of a shift of advertising expenses out of the fourth quarter and into the third quarter because of the impact of the new revenue recognition standard. For the quarter and fiscal 2018, the decline in the operating profit margin was less than we experienced in the prior year, which was in line with our model. Our effective tax rate in the fourth quarter was approximately 19.7% and reflects the lower federal tax rate resulting from the Tax Act and approximately $8.9 million of net after-tax benefits due to distinct events occurring in the quarter as compared to approximately $4.3 million of favorable tax benefits last year. Our fourth quarter net earnings per diluted share were $1.20, excluding the noncash goodwill impairment charge. Including the impairment charge, our net loss per diluted share was $1.92 for the fiscal 2018 fourth quarter. Now looking to our balance sheet. We ended the quarter with approximately $1 billion in cash and investments, an increase of approximately $271 million, which is approximately 35% more than the amount of cash and investments we had at the end of fiscal 2017. We also ended the year with retail inventories of approximately $2.6 billion at cost, which represents a reduction of nearly 5% or approximately $126 million compared to the end of fiscal 2017, resulting from our ongoing focus on inventory optimization strategy. Capital expenditures for fiscal 2018 came in at approximately $325 million, below our previous estimate, with about 60% related to technology projects, including investments in our digital capabilities and the development and deployment of new systems and equipment in our stores. The remaining CapEx was primarily related to our new store openings and investments in existing stores. During the fourth quarter, we opened 3 new stores and closed 21 stores. Share repurchases during the fourth quarter were approximately $78 million, representing about 5.2 million shares. In addition, our Board of Directors today declared an increase in the quarterly dividend to $0.17 per share from $0.16 per share to be paid on July 16, 2019, to shareholders of record as of June 14, 2019. Now let's turn to our modeling assumptions for fiscal 2019. Consolidated net sales are modeled to be between $11.4 billion and $11.7 billion driven by the declines in in-store traffic that we've been experiencing as well as actions being taken in support of our bias towards prioritizing profitability over near-term sales growth. This will be partially offset by anticipated strong growth in our digital channels as well as optimization of our coupon strategy. Comparable sales for the year are expected to decrease in the low to mid-single-digit percentage range. Gross margin as a percent of net sales is expected to be between 34.2% and 34.6%, up slightly as compared to fiscal 2018, representing an improvement in the year-over-year trend. To recap some of what Steve mentioned earlier, we have many initiatives underway focused on improving gross margin, including merchandising the mix and driving sales to better margin category, including our destinational category as well as our private-label and proprietary brands; leveraging our investments in our value optimization team and pricing tools to modify our algorithms across initial, dynamic and local pricing and markdown strategies, improving our coupon expense rate through various actions, including coupon exclusions, adjusting our value offer and limiting coupon availability; and leveraging our investments in logistics software to enhance our inbound transportation network and drive reductions in our outbound shipping expense. SG&A as a percent of net sales is estimated to be between 30.6% and 31%, up slightly compared to fiscal 2018, also representing an improvement in the year-over-year trend. Key assumptions include in payroll and payroll-related items, we expect to offset external wage pressures by improving store productivity. These include improvements in our store labor model enabled by the implementation of revised staffing grids; a recent realignment of our field support structure which was implemented last month; benefit from initiatives to reduce tasks informed by learnings from industrial engineering studies, including leveraging our assisted store ordering algorithm; a reduction in ticketing required; and a reduction in returns processing due to a change in policy; as well as from utilization of new functionality of our workforce management solutions. In occupancy expense, as Steve said, we were conducting a comprehensive review of all our store leases with the assistance of a third party, which is now complete. The negotiations are progressing on plan, and we expect the reduction in these occupancy dollars to occur in the back half of fiscal 2019. In advertising, we plan to continue to optimize our direct mail events and improve the efficiency of our digital marketing as we continue to manage the business with a bias towards profitability over near-term sales. In technology-related expenses, including related depreciation, we expect increased expense associated with maintenance cost and our shift to cloud computing as well as the cost associated with some of the significant IT projects delivered midway through 2018, such as front-end optimization and human capital management, that will have a full year impact in fiscal 2019. Mitigating some of these headwinds will be further leveraging of our India Development Center. We have also incorporated into our plans for the first quarter of 2019 approximately $9 million for cost associated with the recent realignment of our field support structure and estimated costs through the end of the first quarter associated with a recent shareholder activity. Any cost associated with this shareholder activity beyond the first quarter is not considered in our plans, and we will revised our estimate at the end of the first quarter, if necessary. Depreciation expense is expected to be in the range of approximately $330 million to $340 million. Our operating margin rate is expected to be relatively flat to slightly better than fiscal 2018. Net interest expense is expected to be approximately $65 million for the year. Our full year tax rate is estimated to be about 27% with the first quarter expected to be approximately 60% to 85% primarily due to the requirements of the share-based accounting standard adopted in fiscal 2017 and the timing of the [grantee] investing schedules of our stock-based compensation. We expect the year-over-year reduction in retail inventory at cost of approximately $100 million or about 4% at the end of the fiscal year. This would be a further reduction to the approximately $300 million achieved over the past two years. Capital expenditures for 2019 are expected to be in the range of approximately $350 million to $375 million, subject to the timing and composition of projects. This year's spend includes about $50 million associated with investments in warehouses for e-commerce distribution and personalized product. We expect to open approximately 15 new stores in fiscal 2019. This will be offset by a minimum of approximately 40 stores we expect to close. This number will grow unless we are able to negotiate more favorable lease terms with our landlords. Most of these planned closures are for Bed Bath & Beyond stores. We expect to maintain a solid reserve of cash and investments even after funding our operations and capital expenditures as well as our quarterly dividends and approximately $225 million in share repurchases. As a reminder, our share repurchase program may be influenced by several factors, including business and market conditions. Based on these and other planning assumptions, including the reduction of $0.05 due to severance and shareholder activity cost, we are modeling net earnings per diluted share to be between approximately $2.06 and $2.15, slightly higher than fiscal 2018. Excluding these costs, our net earnings per diluted share is modeled to be between approximately $2.11 and $2.20. On a quarterly basis, we expect to see gradual improvements in our financial performance as the year progresses, mainly after the first quarter. As such, our net earnings per diluted share will be stronger in the back half of fiscal 2019 due in part to the timing of our transformational initiatives as well as the usual seasonality of our business. For the first quarter, we are modeling net earnings per diluted share in the range of $0.02 to $0.07, including a reduction of $0.05 due to the severance and shareholder activity costs. Excluding these costs, our net earnings per diluted share is modeled to be between approximately $0.07 and $0.12. Our first quarter model also reflects the decline in comp sales of between 5% and 6% due to the shift in the Easter holiday, a planned shift in our advertising out of the first quarter and into the fourth quarter of fiscal 2019 and an acceleration of our bias towards prioritizing profitability over near-term sales growth. We expect gross margin to show improvement in deleverage as compared to the fiscal 2018 fourth quarter, including a more favorable coupon expense rate. In SG&A, we expect deleverage from our fixed cost due to the planned decline in comp sales, including our technology costs and occupancy expense and the inclusion of approximately $9 million of severance and shareholder activity cost. Also, as I mentioned, our tax rate is modeled to be between 60% and 85% for the first quarter. As a reminder, the first quarter typically accounts for the smallest portion of our annual net sales and earnings. Looking beyond 2019, our 2020 targets as well as our long-range goals are supported by many of the initiatives that Steve mentioned earlier. So starting with net sales. We believe our net sales in fiscal 2020 will be in a similar range as 2019 of between $11.4 billion and $11.7 billion. Longer term, we are targeting low single-digit sales growth rates. We expect our future sales growth to be supported by enhancements to our overall assortment such as new proprietary brands and continued growth in personalized product. Sales will also be favorably impacted by our efforts to scale our next-generation store learnings to grow our baby business, including additional buybuy BABY stores; to leverage our new value optimization team and tools to ensure that our customers are getting the right value for the products they need and want most; to leverage our new FEO platform and apps and further enhance our customer shopping experience as well as to expand our decorating services across all concepts. These sales initiatives will all be supported by a renewed focus on brand marketing, incorporating an enhanced brand message and a greater focus on personalized messaging. Turning to gross margin. We have several efforts underway to drive gross margin improvement in 2020 and believe that we can drive additional gross margin improvement of 40 to 90 basis points relative to 2018. Longer term, we can achieve about 200 basis points of gross margin improvement with target margins of approximately 36%, returning to fiscal 2017 levels. These efforts involved improvements in our assortment mix and aligning our branding, store expertise, visual merchandising and digital experience to focus on better margin categories such as our destinational businesses as well as our own private label and proprietary product; optimizing our coupon strategy; leveraging our enhanced systems and process improvements in our supply chain to further optimize our store and e-commerce fulfillment network; enhancements in our global sourcing capabilities, including plans to more than triple our direct importing and sourcing for Bed Bath in the years ahead as well as leveraging our expertise and analytics and new internal reporting capabilities to better evaluate the profitability of our product offerings by items, by channel. Turning to SG&A. We also have a number of efforts underway to drive SG&A improvement, and we believe we can achieve about 100 basis points of SG&A improvement over the long term. These efforts involve optimizing our store labor model by increasing associate productivity through technology tools, training, reductions in inventory levels and process improvements; managing our corporate structure to continue to adapt to the needs of the business; further optimizing our store footprints to meet the needs of each market and continued management of the productivity of our advertising investments. In addition, we expect our capital expenditures to begin to level off in 2020 at around $350 million and stabilize at that level long term, curtailing the growth in depreciation expense we have been experiencing over the past several years. Based on all of these planned improvements, we expect to see our operating margin improve in 2020 and, over time, expand by over 300 basis points to achieve our 6% long-term target. We expect ongoing SG&A savings will allow us to achieve operating income growth above our long-term sales growth target. The operating leverage created in the coming years will drive significant cash flow generation. We have a disciplined capital allocation framework that balances organic investment to ensure long-term success of the business and maintaining sufficient liquidity to provide a stable and flexible financial position with capital returns through both dividends and share repurchases. We have returned over $550 million of capital through dividends and share repurchase since fiscal 2017. And while this is a matter reviewed with the board on a regular basis, we have modeled continued repurchases to deploy excess capital. In 2020 and long term, with the combination of our continued capital allocation strategy, which includes share repurchase and our operating margin improvement, we expect to achieve double-digit growth rates in net earnings per diluted share. Let me now pass it over to Steven for closing remarks.

Thank you, Robyn. While our strategy and operational execution are each a major component of our future success, the right board and governance structure provide effective oversight and help assure that we achieve our objectives. Bed Bath & Beyond's Board of Directors and management team are committed to acting in the best interest of our shareholders. As we noted in the press release we issued today, the board has been undertaking a comprehensive review of its composition, governance structure and compensation practices. In connection with this review, the board has named Patrick Gaston as Lead Independent Director, has reconstituted its Nominating and Corporate Governance Committee. We have also accelerated our previously established board refreshment program, which has already resulted in the addition of three new independent directors in the past 2 years. We anticipate further changes in the near term, and we look forward to discussing them with our shareholders in the coming weeks. Finally, as you've likely seen, a group of 3 activist investors has named candidates to take control of the Bed Bath & Beyond Board of Directors. The composition of the board will be voted on at the 2019 Annual Meeting of Shareholders. The reconstituted Nominating and Corporate Governance Committee, comprising 3 independent directors and the board will evaluate the activist groups' director candidates consistent with our established review processes and make a recommendation to our shareholders.

Thank you, Steven. As a reminder, we would like the Q&A to remain focused on our financial results, transformation initiatives and outlook. As such, we will not be addressing Q&A beyond that scope. With that, we'll open up the call for question.

[Operator Instructions] And our first question comes from Steve Forbes from Guggenheim. Your line is open.

I wanted to focus on the gross margin guidance for '19, right, so you called out the BEYOND+ membership ramp headwind, right, for the last four quarters here during the call. So can you just help us quantify the offsets, right, or the drivers, right, as you referred to in for '19, which would walk us to your guidance for the 10 to 50 basis points of expansion for the full year? Robyn D'Elia: Sure. We have a number - sorry.

It would also be - I know you listed them, but any, any - if you can quantify some of the drivers, because it's a pretty significant change right in trend, especially if you look at the first quarter to what the implied sort of Q2 through 4Q would be? Robyn D'Elia: We did not - we've not quantified the pieces on the call, but we did provide information about what those initiatives are, and what those drivers are, and they are driving sales to the better margin categories, focusing on our value optimization initiatives, optimizing our coupon strategy and implementing supply chain enhancements.

So you are saying, you are not going to provide no additional color other than that?

Yes, I mean – there's several things contributing in each category, all the way through our supply chain and how we ship items to our customers in different packaging to the offers that we're offering to the customers to our coupon strategy, so it is a variety of items all contributing.

And then just a quick follow-up. I think I caught on the call, you noted sort of a change in the return policy. And I think we saw that in the stores as well. Can you just comment further on what the change was and how that's helping you this year as well?

Yes, when we've looked at our return policy, of course, our focus is always on servicing our customers, but there were some components that just due to competitive situations, where we wanted to make sure that the returns are coming back to our store were purchased in our store, we've changed some requirements requiring receipts, of course, we have the ability to help the customers by looking at the systems that we have and they purchased with the credit card or off the registry. But we've - we've changed the policy to require receipts of most in most instances of course we will accompany customers if we need to, and we also changed the return timing for several categories like electronics and other items with a plug to be less than our total policy, which is now 180 days that will be even less either 30 or 90 days based on the obsolescence cycles of those products that's required, we really had a requirement to tighten down those return windows. And so those are really the main changes to the policy. We're always with an eye trying to be best-in-class when we look at each of those policies.

And our next question comes from Simeon Gutman from Morgan Stanley. Your line is open.

This is Josh Kamboj on for Simeon. Understanding you're not going to quantify anything maybe philosophically, could you talk about what changed between Q3 when you hinted the 2019 stabilization coming more from SG&A to now with more of it's coming from gross margin? Robyn D'Elia: Sure. We've gone through our detailed model. As you know, we provided information preliminarily about '19 earlier than we had in the past and now that we've put together a detailed plan around '19, taking into consideration all of the impact of the transformational initiatives and the timing of when they will be implemented in the plan, we've provided these results and which you pointed out - shift a little bit the mix in terms of where the benefits are coming from.

But, Josh, I think it is again, it is also as we move through this transformation, just also greater visibility. Now things like gross margin and changing merchandising mix, until you start to see traction and it is hard to just quantify when it's going to come, especially with us - it goes through the stock pleasure in our retail method of accounting, untill you see that you're building and driving toward destinational businesses, but we see that the private label is out there and in the timing of that private label. So we're sure that we were getting traction in the coupon decisions that we were making. So all those things that our confidence has been building as we've seen more has allowed us to evolve the model as we go forward based upon greater confidence on the things we're seeing that were less predictable.

And a quick follow-up clarification, are you able to quantify the goodwill impairment by store format within the overall North American retail segment? Robyn D'Elia: From a goodwill perspective, you look at the calculation as a whole - for the company as a whole, so it's really not pointed toward any segment, you evaluate the fair value of the company compared to the market - the market cap of the company compared to the shareholders' equity of the company as a whole.

So just to point out again, as Robyn said, it's primarily the market capitalization of the company it's tied to, not the performance of the concepts.

And your next question comes from Seth Basham from Wedbush. Your line is open. Seth, your line is open.

You might be on mute, Seth.

[Operator Instructions] And our next question comes from Michael Lasser from UBS.

Can you give us a sense for how many of your transactions currently involve a coupon? And where do you think that will go and what will be the impact of sales from your reduction in couponing?

Yes, the end of the intention is to - and now that we have much better analytics and the ability to look at and the coupon transactions and the lifetime value of a customer, the attachment to what items and what channel we're able to make better decisions about it, so the decisions that we've made do impact sales, but they are also driving profitability.

So more than half of your transactions using a coupon today? And do you think that will be less than half a couple of years from now?

Again, I don't think that, that's something that we specifically talk about. But most importantly, the direction is to reduce the reliance on the coupons. And again, all the things we're doing around the product, the mix, the private label proprietary product, the personalization, the marketing, the movements we're going to make towards better brand marketing are all intended to really reduce the reliance on the coupon. Robyn D'Elia: And we started to see traction in that already in the fourth quarter and are also experiencing the same in the first quarter.

So again, like we said, whether it was coupon exclusions, adjusting the value offers of the coupon, or just limiting coupon availability, those decisions are being made with great specificity to make sure that they are driving overall profitability.

And the next question comes from Jonathan Matuszewski from Jefferies. Your line is open.

The first one is just on the advertising budget. Could you talk about the puts and takes of kind of the contemplated ad budget? I'm just trying to better understand the efficiencies you're driving this year and any offsets as you seek to communicate kind of this new Bed Bath to customers and add some more experiential retail to stores. So I'm just trying to kind of understand the thought process there. Robyn D'Elia: Yes. Our goal is to optimize our direct mail events and improve the efficiency of all of our digital marketing as well.

Yes. And I think as we have better analytics about the incrementality of certain events, we are repositioning some events. We are moving some advertising from the first quarter to the fourth quarter. We're looking at the offers that we have and the frequency and the availability in which channels we offer the coupons and other value statements. And so it's a combination of changes that we're making through the marketing, also supplemented by increasing brand presence that we'll be offering to the customer, which will hopefully wind up with a better balance of brand value and items shown to the customer.

And then just a follow-up, so I understand the vast majority of sales is the core Bed Bath concept, But just trying to get a sense of resource management. Is there like a ballpark estimate of kind of time spent in terms of strategic planning and operations for some of the other banners like Cost Plus or Christmas Tree Shop and other banners outside of Bed Bath? Just trying to get a sense of how much time and resources is being allocated to the core Bed Bath concept.

Here again, the focus is in our customer. And then when we look at the different banners, it's really that whether it be the product or how we operate our supply chain, we try to create all the synergies around that and we try to do more with the customer. So these are all things, if you look at the next-generation store for Bed Bath and you look at the merchandise that we're offering. So the health and beauty care, the food and beverage, the scarcity product, the home decor, home accessories, all of that is -- it comes from different concepts, different banners. It's all geared to do more with the customer. When we talk about how we're doing our marketing and we're talking about personalization, what we learned about customer, it's really across -- to leverage across all these brands, the ability to learn about our customer to do more with them as we talked about our bridal registry business and converting it into a baby registry business. All these things are intended to do more with the customer. So -- and again like you said, is that the focus because of size and scale is Bed Bath. And so just the opposite of, I think, being a distraction, it's the benefits that we derive from these other banners has been significant to date. And we plan on that to continue going forward.

And your next question comes from Curt Nagle from Bank of America. Your line is open.

Would you guys be able to give detail on segment performance, particularly buybuy BABY? And would you guys consider divesting any of your concepts?

Listen. Like any public company, we regularly evaluate the portfolio and then look at any value-creation opportunity. But I think that, as I was just talking or answering Jonathan's question, there's a great level of benefit in synergies right now across the product, the operations and servicing our customer when it comes to the entities. But that said, we're very well advised as a company. We're open-minded to all opportunities that create shareholder value.

And then on segment performance?

Yes. We do operate two segments, one is the business and the other is North American retail. And we do operate all the concepts as one entity and as reported as North American retail.

And our next question comes from Brad Thomas from KeyBanc. Your line is open.

I wanted to address the revenue guidance for the year. It does look like you're guiding the first quarter revenue down about 6%, the full year down 3% to 5%. I guess, can you talk a little bit about what you're seeing in terms of maybe underlying consumer performance versus the reaction to maybe some of the changes you're making in the business right now and the promotional strategy right now? And how you're expecting some of those change going forward? Robyn D'Elia: Sure. So as you mentioned, our first quarter comps are planned to be down between 5% and 6%. Of course, we take into consideration everything we know about the business as we're building our plans. And heading into the future quarters, we are continuing to see strong growth in our digital channels, and we also expect additional benefit from the further optimization of our coupon strategy.

And in the first quarter, we have the Easter shift with Easter being later this year. We have shifted some advertising into the back half of the year. And also, there are some changes that we've made several months ago, for example, increasing our shipping threshold from $29 to $39. That will anniversary as we get later into the year. And so all those factor in.

As well as - I'm sorry. I look at Brad, but he was just saying, as Gene started on this that reducing the advertising on some of these things we've done. We're reducing e-mailing and SEO, just like Gene said, the free shipping that we're eliminating items from the websites of less profitable items, policies around our Beyond stores know that we've taken into account to drive profitability. But it all goes back to what we said last year in terms of really driving a bias towards profitability. And a lot of those things will be anniversaried as we move through the year.

And so as we think about maybe the headwinds revenue from pulling back on some of the promotions getting more efficient with your promotions, any ability to quantify for us how much of the top line headwinds that may be here for this year? Robyn D'Elia: Well, all results in the sales guidance that we provided between the $11.4 billion and $11.7 billion for the end of the year.

And your next question comes from Oliver Wintermantel from Evercore ISI. Your line is open.

I had a question regarding the -- your longer-term strategy about the [biasing] towards driving profitability. So it looks like the comp in '18 was negative 1.1, but it shifts to low to mid-single-digit comps in '19. So just if you could give us maybe a few minutes about what's the strategy -- why the strategy on profitability is when it looks like you might be losing share in the category?

Yes. I mean, the more we get more advanced analytics, the more we're understanding the profitability of our sales. And so we're able to make better decisions about what categories are profitable at what price points through what channel. And so we're able to pull back on some areas where we're not as profitable to put our efforts into the areas that we are profitable. And that's really the focus that we've been gaining on and focusing on for the last several months, and we will announce in the future.

And regarding online, so it looks like the last few acquisitions that you've done were really to enhance your online strategies versus brick-and-mortar. For '19 or '20, do you think you need more acquisitions in the online categories? Or are you happy with where you are from a positioning perspective?

We regularly evaluate any opportunities that are out there. Those are past few acquisitions, whether it be One Kings Lane or Personalization, we are all geared, again, to servicing the customer and doing more with the customer when it comes to the meaningfully differentiated product that we're trying to build. The personalized product is a component of that and our ability to do that is an advantage for us. When it comes to really trying to grow out and be more robust when it comes to total home and to be inspiring to a customer, the One Kings Lane offering was a great complement to what Bed Bath has done and it has been an introduction now for us to grow that part of our business.

And the last question will come from Peter Benedict from Baird. Your line is open.

I think the first one, you talked about tripling the direct import percentage. Can you give us a sense at what percentage of the business is currently direct imported?

Yes. I think we just amplifying, it's directly importing and direct sourcing. So some of it will be sourcing products that we buy from domestic vendors in the United States or sourcing it from overseas, and we'll be able to enhance our margins in that big manner and then also going direct on - to the factory and other items, so it's a combination of the two and we think we'll be able to jump on that opportunity. And the total population is everything we buy from our vendors whether it's domestic or overseas today. And so - but we do think the volume that we're doing today will be able to triple, but I don't believe we have the volumes to share today.

And it's most underpenetrated when it comes to Bed Bath with the biggest opportunity.

That makes sense. And then on the private label, one on private label, one on BEYOND+. On the private label, you've got the six brands, I guess, five this year. Are there plans to add more over time? And where are you thinking about the penetration potentials. And maybe we go out to 2020, where do you think private label could be as a percentage of your sales?

Yes, the customers are going to talk to that. Obviously, they'll inform us by their -- and as well as the relationships we have with our vendor community. Really what we're trying to do is really drive meaningfully differentiated products. When we look at our destinational categories, there's great ability to do that, to be different, to show something different, to be compelling when it comes to those categories. So to the extent that we can work with existing vendor base to develop that, with preferred brands like UGG, that's great. To the degree that we're going to need to do that, that's an opportunity for us. So really, it really goes back to being different, the leader in what we do, showing the customers things they can't find elsewhere and how much of that do we have to develop ourselves, so for differentiation and, obviously, the margin opportunity that's associated with it.

And then last, just on the BEYOND+ membership, how should we think about the growth potential there? You said 1.1 million members. Maybe a comment on kind of growth rate, what you're seeing there and maybe what percentage of your sales are coming from those members and where you think that could go? Robyn D'Elia: So we are happy with the performance of BEYOND+ to date. We do have some stats on customer behavior. They shop more frequently, they bring in higher revenue for us than our average customers. And we are continuing to grow the program and continuing to evaluate the benefits and the long-term potential.

Yes. It's really part of the value of seeing how they perform year-over-year. They might be going through a particular life stage when they sign up and, so we want to see how consistently they shop year-over-year in the program. So we're still early in the program. We're seeing favorable results, but we're still in the process of learning what the behavior is over the long term.

And this concludes the question-and-answer session. I'll now turn the call back over to Janet Barth for final remarks.

Thank you, Adrianne, and thank you all for participating in our call today. If we didn't get your questions or if you have additional questions please feel free to contact me for a follow-up call, have a good night.

Thank you, ladies and gentlemen. This concludes today's conference call. Thank you for participation and you may now disconnect.