Welcome to Bed Bath & Beyond's first quarter fiscal 2019 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, July 10, 2019, at 8:00 PM Eastern Time through 8:00 PM Eastern Time on Friday, July 12, 2019. To access the rebroadcast, you may dial 888-843-7419 with a passcode ID of 48713230.At this time, I would like to turn the conference call over to Janet Barth, Vice President, Investor Relations. Please go ahead.

Thank you, Sheryl, and good afternoon everyone. Before we begin, I want to remind you that our fiscal 2019 first 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 the Form 8-K we filed just ahead of this call. Joining me on our call today are Mary Winston, Bed Bath & Beyond's Interim Chief Executive Officer and Member of the Board of Directors; and Robyn D'Elia, our Chief Financial Officer and Treasurer.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 including the risk factors section in our Annual Report on Form 10-K. The company undertakes no obligation to update or revise any forward-looking statements.Additionally, the information we will discuss today contain certain financial matters that exclude amount or are subject to adjustments that have the effect of excluding amount that are included in the most directly comparable measures prepared in accordance with generally accepted financial measures. For reconciliation to the most comparable measures presented in accordance with GAAP, please refer to the tables at the end of our earnings release available on our website and as an included to our Form 8-K filed today.Some highlights from the first quarter include adjusted net earnings per diluted share were $0.12 at the high end of our guidance range of between approximately $0.07 and $0.12 and excluded $3.03 related to a non-cash impairment of goodwill and other intangible assets as well as severance and shareholder activity costs. Net sales declined approximately 6.6%, slightly below our guidance of approximately $2.6 billion. Retail inventories were reduced by approximately $124 million at cost or approximately 5% compared to the end of the prior year first quarter.We ended the first quarter with approximately $923 million of cash and investments which is approximately 9% more than the amount we had at the end of the prior year period. In addition, on July 8, our Board of Directors declared a quarterly dividend of $0.17 per share payable on October 15, 2019 to shareholders of record at the close of business on September 13, 2019.I will now turn the call over to Mary.

Thank you, Janet, and thank all of you for joining us this afternoon. On today's call, I would like to share my initial thoughts and observations about the business and speak to our four near-term priorities and areas of focus. Following my comments, I will turn the call over to Robyn for a review of the financial and operational highlights for the quarter, as well as our outlook for the full year and then we will take your questions.As you may know, I joined the Bed Bath & Beyond Board of Directors in early May in connection with the company's transformation and refreshment of the Board's composition and governance structure. As a long-time customer, I believe Bed Bath & Beyond is a great brand with a strong customer affinity and I was eager to join the Board and contribute to stabilizing and repositioning the business for future growth as a successful omnichannel retailer. When the Board then determined it was the right time to identify the company's next generation of leadership, I was honored to step in as Interim CEO. I am working closely with the Board and management leveraging my retail industry experience as well as my background in finance and corporate strategy during this transition period. I view my role as one where I can provide strategic leadership and help prioritize and drive forward the most meaningful initiatives to advance the work under way to improve our financial performance, enhance our competitive position, and drive shareholder value.I will start today with my initial observations of the company. I have made a concerted effort over the past several weeks to meet with many associates across the organization, gaining an understanding of the company's history, culture, and the way we operate. I have visited many of our stores across multiple banners as well as one of our distribution facilities to ensure I saw firsthand the operations of our business. During these visits, I have witnessed our associates' passion for customer service and the deep connection we have with our customers was obvious. It is also compelling to see our customers' enthusiasm and commitment to our brand. That said, it is also clear that the company has not kept pace with how the customer has evolved and how consumers shop today.We need to give our customers a reason to keep shopping in our brick-and-mortar stores, and in order to do that we must update and enhance store experience. This will continue to be a priority for us. Beyond enhancing our store experience, we must also transform the online shopping experience to engage our customers digitally. Both our stores and digital experiences will continue to be areas of focus for us. It's still early and there is much work to do to fully assess the business. Importantly, what I have seen and heard up to this point has validated my confidence that Bed Bath & Beyond is an iconic brand with tremendous opportunity.The company has a strong geographic footprint as well as attractive and growing product categories. We also have a resilient team that is operating with a sense of urgency to improve the company's competitive position. As we look ahead, the Board and the management team are in full agreement that there needs to be a fundamental change in our approach to executing the company's business transformation. A key challenge for the business in the past has been that there have been too many initiatives under way which has resulted in a lack of strategic focus and less meaningful results. We are committed to completing a deep review of the business to prioritize and drive forward the most meaningful initiatives to improve performance.This is part of the critical work underway at the Board level. Under the leadership of Independent Chairman, Patrick Gaston, the new Board consisting of a highly diverse set of leaders with a wide range of fresh perspective and backgrounds is well-equipped to oversee and partner with management to drive the intensive business transformation that is needed. Importantly, all of our directors are highly engaged and are moving quickly to continue to enhance our governance structure, transform our compensation program, evaluate our capital allocation priorities, and assess and shape a new strategic direction for our company.To that end, the recently formed Business Transformation and Strategy Committee is set to review and evaluate the ongoing business transformation and will make recommendations on how the company can best capitalize on and navigate the evolving retail environment to accelerate the company's evolution. Together, the Board and the management team are challenging our current value proposition and operating model to take on a more holistic approach to the transformation while also maintaining a focus on delighting our customers and delivering long term value to shareholders.We are in full agreement on our four key, near term priorities. First, stabilizing sales and driving topline growth. Secondly, resetting the cost structure. Third, reviewing and optimizing the company's asset base, including our portfolio of retail banners. And finally, refining our organization structure. As I evaluate and assess the work underway, my early observations reveal that our number one priority must be a focus on stabilizing our topline and optimizing our sales opportunities. This will require collaboration and refinement of initiatives across multiple areas of the business, including merchandising, marketing, branding, pricing, and supply chain. And as I mentioned, we will also be sharpening our focus on delivering a seamless omnichannel experience, including our current in-store and digital experiences. To be clear, our efforts will be focused on opportunities to drive profitable sales growth.Our second priority is to reset our cost structure to better align with the current state of the business. This will include reductions in cost of goods and SG&A. While the company has previously initiated some actions and made progress on this front, we need to dig deeper and to cast a wider net. Focus on our cost of goods and gross margin will entail an assessment of opportunities within our proprietary and private-label brands as well as our supply chain and global sourcing capabilities. Prior actions underway relating to pricing strategies, coupon expense and outbound shipping expense are showing early positive results.Our initial focus on SG&A has resulted in further reductions in store payroll, primarily through better alignment of store hours with foot traffic, a streamlining of our field support structure and a reduction in tasks performed at the store level. In advertising, we have been improving the efficiency of our direct mail events and digital marketing. As we continue our focus on our cost structure, we would take a fresh look at our corporate overhead, ensuring we have the right structure and resources for the business we are managing today. Finally, the company commenced a comprehensive real estate optimization effort six months ago with the assistance of a specialized real estate consultant who will be leading the renegotiations of the company's leases. Occupancy saving from this effort will benefit fiscal 2019 and far beyond.Our third near term priority is to review the company's asset base. This encompasses a fleet optimization project for all Bed Bath & Beyond stores to understand how best to position our store locations in various markets across the country and Canada. In addition to the real estate optimization efforts I just mentioned, we anticipate leveraging the findings of this fleet optimization project to evaluate potential store closures and/or relocations. These decisions would be based on a combination of each stores' performance, profitability, its geographic location and the customer demographics. Our ultimate objective is to find the right balance between our physical and digital presence within the markets we serve and to deliver the shopping experience our customers want. The Board and I are also in the process of evaluating the various retail banners operate to better understand their strategic and financial contributions to the portfolio. Following this review, we will determine the appropriate next steps.Our fourth near term priority is to take a fresh look at our organization structure. We have a seasoned management team that understands the business and culture well. And as I mentioned earlier, our senior teams are operating with urgency and I am grateful for their hard work and commitment. It is critically important that as we transform Bed Bath & Beyond, we ensure we have not only the right talent and expertise but also the right team structures in place to facilitate a connected and efficient organization. To build the future of this business, leaders will operate with clarity and focus and be empowered to make decisions for which there will be accountability. By focusing on our four near term priorities, we will reset our approach to the company's business transformation prioritizing the things that we believe are going to deliver the greatest value to our customers and our shareholders.Before I turn the call over to Robyn, I would like to provide a brief update of the Board's CEO search. With the support of a leading executive search firm, the CEO search committee has undertaken a robust process to recruit a permanent CEO. Working to identify a leader who has a multifaceted skill set, including transformation and innovation experience in the retail sector, as well as e-commerce and marketing experience. We have generated significant interest and while urgent, we will take the time we need to select the right leader for the future of Bed Bath & Beyond. We will update you further once we have something to share.Finally, I would like to comment briefly on first quarter results and our outlook for the full year. As you saw in our news release, first quarter sales were slightly below the range the company had provided while EPS on an adjusted basis was at the high end of the company's previously provided range. As we look forward, taking into consideration both the work to be done in our transformation as well as continuing challenges in the broader retail environment, we are taking a more conservative approach to our outlook for the remainder of fiscal 2019. As Robyn will discuss in a moment, we have maintained our sales and earnings expectations for the year, albeit at the lower end of the previously stated guidance ranges.In summary, there is critical work to do and there are challenges we are working to address. We remain confident in the underlying business and our ability to leverage the strength of the Bed Bath & Beyond brand and our lasting connection with customers to deliver on our near term priorities and transform the company. With a renewed focus on our customer and a winning customer value proposition, we believe we can capture opportunities in the market and create sustainable value for our shareholders. As we move forward, we will share our progress about how we are executing against our near term priorities and our plans to deliver improved results.And now I will turn the call over to Robyn to review our financials and our outlook. Robyn D'Elia: Thank you Mary. Starting with our bottomline. For the first quarter of fiscal 2019, our reported net loss per diluted share was $2.91. This loss included pretax charges related to non-cash goodwill and other impairment of approximately $401 million, severance, including the departures of key senior executive of approximately $38 million and shareholder activity costs of approximately $8 million. Excluding these items, our net earnings per diluted share was $0.12 at the high end of our guidance range. To provide more meaningful insights about the operational performance of our business during the first quarter, my comments about the quarterly results exclude the impact of these items in 2019 as well as the impact of severance incurred in last year's fiscal first quarter.Turning now to a review of our sales results. Our net sales in the quarter were approximately $2.6 billion, a decrease of approximately 6.6% from the first quarter of last year. Comp sales for the quarter also decreased approximately 6.6% and reflected a decrease in the number of transactions in stores, partially offset by an increase in the average transaction amount. On a directional basis, comp sales from our stores declined in the high single digit percentage range, partially offset by slight growth in comp sales from our customer facing digital channels.As we discussed during our earnings call in April, our first quarter modeling assumptions included a decline in comp sales due to one, a shift in the Easter holiday to later in the quarter this year compared to last year which, for us, would reduce the tailwind effect we typically get from consumers looking to refresh their homes for spring. Two, a lower advertising spend this quarter versus the prior year period with plans to shift that spend to the fourth quarter. And three, an acceleration of our bias towards prioritizing profitability over near term sales growth, which include actions such as eliminating less profitable SKUs from the assortment, adding minimum quantity requirements and excluding coupons for select SKUs.Gross margin for the quarter was approximately 34.5% of net sales as compared to approximately 35% in the first quarter of last year. In order of magnitude, this decrease as a percentage of net sales was primarily due to a decrease in the merchandise margins, partially offset by decreases in coupon expense and net direct to customer shipping expense. The decrease in coupon expense was the result of a decrease in the number of redemptions with fewer pieces distributed partially offset by an increase in the average coupon amount. In addition, as we have previously described, our BEYOND+ membership program has impacted and will continue to unfavorably impact our booth 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 first quarter, we have approximately 1.2 million BEYOND+ members. We estimate the impact from BEYOND+ on our gross margins was approximately 60 basis points for the first quarter this year and 40 basis points for the first quarter last year. Notwithstanding the short term margin impact during this period of increasing member enrollment, we continue to evaluate the learning and we remain very encouraged by the incremental benefits we are seeing as well as the long term potential of BEYOND+. In addition, this program is another means to gain customer insight that over time will help us to direct specific product offers and content to these loyal customers through marketing personalization to drive incremental sales and margins enhancements.SG&A for the quarter was approximately 32.9% of net sales as compared to approximately 31.7% in the prior year period. In order of magnitude, this increase in SG&A as a percentage of net sales was primarily due to increases in technology related expenses, including depreciation and occupancy expenses. Heading into the quarter, we expect to deleverage some of these fixed costs due to our planned decline in comp sales.Our effective tax rate in the first quarter was approximately 38.6% and includes approximately $2.9 million of net after-tax cost due to distinct events occurring in the quarter. In the prior year period, our effective tax rate was approximately 30.5% and included net after-tax loss of approximately $2.6 million due to distinct events occurring in that quarter. Our first quarter guidance plans for a higher tax rate. However, we had more favorable discrete items than were included in our model, representing about $0.02 per share.Now looking to our balance sheet. We ended the quarter with approximately $923 million in cash and investments, an increase of approximately $76 million or approximately 9% over the end of the prior year first quarter. Retail inventories at the end of the quarter were approximately $2.5 billion at cost which represents a reduction of nearly 5% or approximately $124 million compared to the end of the first quarter last year. During the fiscal first quarter, we further adjusted the carrying value of our goodwill and other intangible assets as required by the accounting rules by taking an impairment charge of approximately $401 million. This non-cash pretax charge was primarily the result of a sustained decline in the company's market capitalization and does not impact our ongoing day-to-day operations.Capital expenditures for the quarter were approximately $68 million with about 50% related to technology projects primarily including investments in our digital capabilities, analytics and logistics. The remaining CapEx spend was primarily for the opening of three new stores and the remodeling of over 40 existing stores, the bulk of which were Next Generation Lab stores.Share repurchases during the quarter were approximately $81 million representing about 5.3 million shares. In addition, on July 8, our Board of Directors declared a quarterly dividend of $0.17 per share to be paid on October 15, 2019 to shareholders of record as of September 13, 2019.Lastly, regarding our balance sheet. It now reflects operating lease assets of $2 billion and operating lease liabilities of $2.2 billion due to the adoption of the new lease accounting standards which, for us, requires all leases with terms greater than 12 months to be capitalized on the balance sheet. As we noted in the press release, the adoption of this standard will not result in significant changes to our statements of operations or cash flows. In addition, there is no impact to any of our debt covenants related to our indenture or revolving credit agreements. Additional disclosure is included in our 10-Q filed with the SEC today.Now turning to our financial guidance for fiscal 2019. As we evolve our plans around the four key near term priorities just described, we will continue to evaluate the components of our financial model for the year. As Mary mentioned, taking into consideration both the work to be done in our transformations as well as the continuing challenges in the broader retail environment, we are taking a more conservative approach to our outlook for the remainder of the year.On our last call, we modeled net sales to be between $11.4 billion and $11.7 billion. Considering what we know about the second quarter-to-date and our outlook for the back half of the fiscal year, we expect our consolidated net sales to continue to be within this range but at the lower end driven by the declines in store comps that we have been experiencing. Net earnings per diluted share are estimated to fall towards the lower end of the previously provided range of approximately $2.11 to $2.20, excluding the goodwill and other impairments, severance expenses and shareholder activity costs.On a quarterly basis, we expect to see improvement in our financial performance as the year progresses. Our model to achieve consolidated net sales at the low end of our previously guided range anticipates a gradual sequential improvement in comp sales from stores as we progress through the year benefiting from our efforts to stabilize sales, including changes to our marketing programs coupled with other sales initiatives underway. Considering this plus the timing of our transformational initiatives as well as the usual seasonality of our business, we believe our net earnings per diluted share will be stronger in the back half of fiscal 2019. Finally, capital expenditures for fiscal 2019 are planned to be approximately $350 million to $375 million. This year's spend includes about $50 million associated with investments in warehouses for e-commerce distribution to personalized products, although we are continuing to evaluate our capital projects for the year.I will now turn the call back over to Mary.

Thank you Robyn. In closing, I want to reiterate my confidence in our associates' ability to connect with and serve our customers. Without question, our associates are our greatest assets. So we need to ensure they have the right tools to effectively and successfully compete in today's retail environment. As we move ahead to execute against the near term priorities that I laid out, our focus will remain on delighting our customers and deliver long term value for our shareholders.And with that, we can now open the call for questions.

[Operator Instructions]. Our first question comes from Bobby Griffin from Raymond James. Your line is open.

Good afternoon. It's actually Budd Bugatch for Bobby. He is traveling today. So I am subbing for him. Congratulations Mary. Good luck to you on your Interim role and we wish you the best on that. I have a few questions, if I could. The first question is, can you talk a little bit about the NGS stores? There are now how many of them? And what is the performance of those? And is the plan still to roll those out?

Thank you for the kind comments. So, in terms of the NGS stores, yes, that is still a priority. We have 34 stores right now. We are still seeing good results. We are refining what we see in the stores and continuing to update and continuing to roll that out. So that program is continuing to be one of our top priorities.And again, as I said in my prepared remarks, we are taking a look though at all of the initiatives. We will be looking at that one as well. And again, as you know, it's still early days, but the performance on that looks good and we are getting good information that will help us transform our store experience.

Okay. And Robyn, on the charge of the goodwill and the other intangibles, is that just related to the market cap fall or is it attached to any of the particular items or items of goodwill on the balance sheet? Robyn D'Elia: The most significant component of the charge is related to goodwill. And just as a point of reference, goodwill is now down to zero on the balance sheet. But there was some residual impact related to the trade names for some of the acquisitions that we have had throughout the years.

Okay. And when you look at the cash flow from operations or free cash, that was significantly below last year. I suspect that includes some of the unusual items, the severance and the shareholder activity costs, what was the net impact of those unusual items on cash in the quarter? Robyn D'Elia: I don't have that component piece broken out right in front of me, but we can certainly give you call with that information.

Okay. And the forward guidance, does that include any more one-time charges or called-out items or are you unable to predict those at this point in time? Robyn D'Elia: No. The guidance that we are providing would be excluding what’s happened to-date and any other one-time items. It's is really guidance from an operational perspective.

Right. And are there any other one-time items that you can see at this point in time? Robyn D'Elia: Nothing built into the plan.

Our next question comes from Jamie Katz from Morningstar. Jamie, your line is open.

Hi. Thanks for taking my questions. I am curios, I think last quarter, it was commented that comps were expected to be in the low-single-digit to mid-single-digit range, and I am assuming that that low-single digit is off the table and we are looking more towards a mid-single-digit decline even with improving comps over the remainder of the year. Is that fair? Robyn D'Elia: For the full year, yes, we’re still in that same low-to-mid, single-digit decline, yes.

Okay. And then I know there are a lot of initiatives underway, but maybe if you can help us think about what initiatives might have been undertaken already where we might see benefits in expenses, things like changes in the buying organization? I know that was partially siloed across brands in the past where maybe we can see the elimination of some redundancies going forward in the near term? Thank you.

So, I will just point us back to some of the things that I have said in my prepared remarks. So, we have had a number of initiatives underway. The renegotiation of some of the company's leases, that's expected to benefit us this fiscal year and beyond. We have also already seen some reductions in our store labor cost as a result of rightsizing to foot traffic and taking a look at streamlining the field organization and eliminating tasks in the stores. So, all of those initiatives are continuing to be ongoing, but we are seeing impact from them now and expect to later in the year. Beyond some of those, we again are going to be looking at where we are getting the greatest impact on reprioritizing within the context of the four-key, near-term priorities, so there may be some shift in initiatives as we go into the back half of the year, but those are some of the primary ones that we are currently seeing benefit from.

Our next question comes from Christopher Horvers from JPMorgan. Your line is now open.

Thanks. Good evening. So I had a question about the guide. Usually with a new CEO and in cases like this, the guidance is often pulled. So, it's interesting that you are only going to the low end despite the strategy is going to shift and it could shift further. So, can you talk about the thought process around keeping the guide and only going to the lower end? And what gives you the confidence, whether you see more cost out opportunity or you see the progression of comp of the business? What's giving you that confidence to be even in the range at this point?

Well, a big piece of it is, as you point out, many of the initiatives are already ongoing. So, while I am still getting my arms around the business and assessing where those initiatives stand and what the impact of them will be, I have seen enough to know that we have got lots of activity going on, even though we may reprioritize some of it, we do expect to see some benefit from it. You will notice that we took out some of the details that we provided in the previous guidance. So, I think as we reprioritize initiatives, there may be shifts between what will impact gross margin versus SG&A and that kind of things. But at this point, I am confident in the topline and the bottom line, although at the low end of the range and again our guidance is without any special items. So, if we make significant changes, we will communicate those at the time.

Thank you. That's a good segue. So as you think about the down 6.6% comp, while that's disappointing and below the range and below the market, at the same time the gross margin decline really improved. So I don't know you have had a chance to think about like, how much was there a comp in gross margin trade-off that was made in this quarter? And do you think does that part of strategy, per se, shift where maybe we get some better comps but the gross margin declines start to reaccelerate? Robyn D'Elia: Well, as we have pointed to you for the last couple of quarters, we mentioned prioritizing profitability over sales and certainly some of the changes that we have made particularly impacted the customer facing digital channel growth, but we are moving those levers or pulling those levers to drive more profitable results. So that's definitely contributing. And there was things where eliminating less profitable SKUs from the assortment, adding minimum quantity requirement for certain SKUs, coupon exclusions, changing dynamic pricing algorithms and all of those have been layering in for some consecutive quarters. I guess in addition to that, we also had initiatives driving improvement in the merchandise margin area, some of which Mary had just recently mentioned but I would add to that that we have been evaluating our pricing strategies as well.

Our next question comes from Oliver Wintermantel from Evercore ISI. Your line is now open.

Yes. Thanks and good evening. I just wanted to double-check. The guidance from last quarter in the fourth quarter, that 2020 guidance, you didn't mention that. Is that still a valid guidance? Or did you pull that? Robyn D'Elia: So in terms of our guidance, we felt comfortable confirming that our sales and EPS would be at the low end of the range previously provided. So our sales range was between $11.4 billion and $11.7 billion and our EPS range was $2.11 to $2.20.

But the 2020 guidance that you gave last time and the long term guidance? Robyn D'Elia: I am sorry. We do not provide any guidance beyond 2019 at this point.

Yes. And I think that's related to the fact that again, I and the Board will be looking at all the initiatives and of course many of the initiatives that we are going to be prioritizing will have impact beyond 2019. And so once we are set on how we are going to reset the transformation and what the top initiative priorities will be, we will be in better position to talk to 2020.

Got it. Thank you. And if I may, the online growth. Did you comment on that in the prepared remarks? And if not, can you maybe update us what online growth was in the quarter? Robyn D'Elia: We said, we had slight growth from our customer facing digital channels. And as I just walked through, the growth in the customer facing digital channels for this quarter was impacted by the actions we took to prioritize profitability over sales. So we eliminated less profitable SKUs from our assortment. We added minimum quantity requirements for certain SKUs. We have not yet anniversaried the increase in our free shipping threshold that we put in place towards the back half of last year. So all of these things are layering on top of one another and impacting the growth in the customer facing digital channels, but we are seeing higher profitability.

Our next question comes from Michael Lasser from UBS. Your line is now open.

Good evening. This is Atul Maheswari filling in for Michael Lasser. Thanks a lot for taking the question. My question is a bit of a follow-up from one of the earlier questions. So you did list stabilizing sales as one of the near term priorities. How do you really expect to achieve this objective without compromising margins, given you have prioritized one over the other in the past? And what are some of the key changes you need to implement to ensure that both sales and margins grow at the same time?

Yes. So obviously it's still early days and we are still getting our arms around everything that's going on and prioritizing what the initiatives will be. But I think in addition to the sales comment, you also have to couple that with our focus on managing gross margin from a cost perspective. So we do expect to drive sales, but we expect that to be profitable. And in the gross margin area, I think we talked about looking at where we are with our vendors and looking at other just components of cost of sales where we can get some benefit there.

Thank you.

Our next question comes from Simeon Gutman from Morgan Stanley. Your line is now open.

Hi. This is Josh Kamboj, on for Simeon Gutman. Thank you for taking our question. Our first question, what rate of industry growth is embedded in your guide for 2019? And how did the market grow versus your initial expectations in the first quarter?

I am sorry. Can you just repeat that?

Sorry, yes. What rate of industry growth have you embedded into your guide for 2019? And how did the market grow versus your expectations in the first quarter?

So I guess, you are thinking about our sales plan? I mean, in terms of our sales guidance, we were anticipating a decline between 5% and 6% in the first quarter. We came in slightly below that sales range. And from --

No. I am sorry. Yes. I was wondering, if you were baking it in a certain rate of home furnishings industry growth as a whole into your guide for the year. And if you could share what that is and what that might have been in the first quarter, like if you thought home furnishings were going to be flat and maybe industry declined a little bit. Not your own guide. Just how you are thinking about the industry backdrop for the year.

Let us take a look at that and maybe get back with you. I mean, as we think about the home furnishing market, it's not a usually declining market, but it's obviously not robustly growing either. I think the biggest thing we see in the market is the continued focus on online sales and that. And so that's impacting everybody in the market. But the overall market, we have not built in any significant expectations in either direction for the market to be booming or for the market to be weighed down.

All right. That's helpful. Thank you. And then just as a follow-up, is it safe to assume that you have 25% tariffs embedded in the guide now? And just in the context of the fact that the guide didn't move that much, were they also --[AUDIO GAP]

I am sorry. [Operator Instructions]. Your line is now open, if you can please complete your question.

Hi. Sorry. I am not sure. I think we are having some latency issues. A follow-up question was just, is it now safe to assume that 25% tariffs are baked into your guide and just in the context of the fact that it didn't move much following what you initially laid out alongside the fourth quarter results, were they also at the 25% level in that initial guide even though the tariffs hadn't stepped up to that rate at that point in time?

No. At the onset of the year they were definitely not at the 25% rate and we are continuing to monitor the situation and we haven't made any changes to the guidance at this point for that rate.

Our next question comes from Steve Forbes from Guggenheim Securities. Your line is now open.

Good evening. I wanted to focus on the BEYOND+ program, right, given the sort of the gross margin implications here. And so just on the growth in members, whether it's quarter-over-quarter or just the run rate of the growth, are you surprised by the ramp in membership growth as it appears it slowed little bit? And are there any plans to sort of tweak the offering whether it's a certain component of the value proposition as you think about reaccelerating that growth? And maybe just if you can comment on what you are seeing as it relates to membership ticket and traffic trends? Robyn D'Elia: So yes, we have seen some growth during this quarter in the BEYOND+ membership program and as we mentioned, we are continuing to evaluate it. So we may see some changes to the value offers in the future. At this point, we are continuing to see positive results for BEYOND+ members. We are seeing that they shopped twice as many times as the average customer and that they spend four times the amount of an average customer. And so we are encouraged by that and we are continuing to monitor it.

And then as a follow-up, maybe for you, Mary. You think about your tenure thus far, obviously traveling around to the stores, the distribution centers, talking to store associates. I think you mentioned, right, in the prepared remarks revisiting the value proposition and sort of rethinking that on how you can improve it. So what did you hear, right, from the store associates as it pertains to what maybe they think or they are hearing from customers as what needs to transpire as it relates to the broader value proposition that Bed Bath & Beyond puts out there?

Yes. Well, the first thing I would say that I have heard from our associates is, their enthusiasm about the customers' commitment to the stores. They know the customers who come in because they are frequent shoppers and they are committed to providing them the best service and the best value that they can. So that's the first thing. I think the other thing I have heard from people and seen myself is the affinity for the coupon. And so we have to continue to manage that and evaluate how we want to handle that, but that's near and dear to the customers' hearts and our stores. Members know that as well. I think from a value proposition standpoint, again, this is something we will be revisiting at the Board level and certainly working with our transformation and strategy committee. But what we are hearing at store level is, customers comparing our pricing to others' pricing and we feel good about the moves we have made recently, but customers are focused on pricing, value and that type of thing. So we are hearing a little bit of that as well.

Our next question comes from Anthony Chukumba from Loop Capital Markets. Your line is now open.

Thank you for taking my question. I guess, my first question is just on the presentation of the result. Particularly, you backed out the goodwill, but you also backed out the severance costs and the shareholder cost and then you showed the comparison year-over-year where you backed out some items in the first quarter of last year. I guess I was just wondering, why did you switch the presentation to show the non-GAAP as opposed to historically when you are going really, for the most part, shown GAAP with the exception of, like, big goodwill amortization charges? I guess, I was just wondering what the rationale was for going to that presentation. Robyn D'Elia: Well, I think, our objective was to present our operating results, present things on an apples-to-apples basis, so it's easy to compare and see the changes or the improvements that we have made on a year-over-year basis.

Okay. That's helpful. And then just a quick follow-up. You have talked about this before, key near term priorities and one of them is sort of reviewing the asset base. And it looks like you will be reviewing all of your concepts including your non-core concepts. Any sense for timing in terms of making decisions specifically on the non-core concepts like which type of potential divestitures?

At this point, I am not going to commit any specific timing. We are certainly moving with a sense of urgency. This is a priority for the management team and the Board. The Board will be overseeing our work to look at the various concepts. And when we have some next steps or something to announce, we will certainly make you aware of it.

Our next question comes from Jonathan Matuszewski from Jefferies. Your line is now open.

Yes. Thanks for taking my questions. So in guiding through the lower end of the range, you alluded to maybe what sounds like a continuation of tough topline trends quarter-to-date. Is that quarter-to-date trend consistent with the high single digit decline in brick-and-mortar comps and slight DTC growth we saw this quarter? Robyn D'Elia: So we are expecting a gradual sequential improvement in the comp sales from stores as we move throughout the year. And we will achieve that through our efforts to stabilize sales, including some changes we have made to our marketing programs and other sales initiatives that we have underway. We did mention earlier that we were going to shift some advertising expenses from the first quarter to the fourth quarter. So that will help out later in the back half. But we are again looking to improve the trend throughout the year.

Got you. So that would include a sequential improvement from 1Q to 2Q?

What we know about 2Q to-date has definitely been built into the model. We haven't seen a major shift in the trend that we have experienced in 1Q at this point. But we are again projecting through the remainder of the year improvement.

Got you. And then, just on the sourcing side, you guys have made some enhancements to the team and opened up a second office in Asia and obviously there were long term plans discussed to really ramp up direct imports in certain categories. So maybe just share some of your latest thoughts there? If there's been any initial traction in ramping up direct imports? Any thoughts there would be great.

Well, let me speak about it a little bit more broadly and then if Robyn wants to add in terms of what we have seen recently. In general, I think, obviously, focusing on our supply chain and our direct sourcing opportunities to provide great benefits. So we are definitely taking a look at that. That is on the docket with all of the initiatives that we will be working with the transformation committee of the Board with to prioritize. We have had early good results and we are looking at certain things in that area, but we don't have a lot to report on it at this point.

Our next question comes from Seth Basham from Wedbush Securities. Your line is now open.

Thanks a lot and good afternoon. My question is first around pricing. You talked about the diluting of pricing strategy. What changes have you made recently? And how are you thinking about pricing relative to the competition going forward? Robyn D'Elia: We have definitely made changes in terms of changes to our dynamic pricing strategies and algorithms and we have looked to optimize our base pricing or initial and base pricing of merchandise. We have seen that those pricing strategies helped us in the merchandise margin area. We saw a decrease in merchandise margin but it's at a lesser rate, I guess, than we have been experiencing. So the trend is improving due to some of those pricing changes that were put in place.

Got it. So your emphasis on the base pricing, you are raising base prices to protect margins. Is that what I should be taking away from this? Robyn D'Elia: Yes. We are evaluating our pricing strategies holistically and that's one element of it, yes.

Yes. So I will put an emphasis on the fact that that is one element of it. You should not take away that we are wholesale increasing prices. I mean we are monitoring what the competition is doing, thinking about our need to stabilize sales and how sensitive the customer can be to pricing. So we are evaluating it holistically. And so on some SKUs and categories we might increase prices, in other areas we might not. So it's more complicated than just saying being able to say that yes, we are taking wholesale price increases because we are not doing that.

Our next question comes from Curtis Nagle from Bank of America. Your line is now open.

Great. Thanks very much for taking my question. So just a quick one on, I guess, potential asset or concept sales. Is that something you will be able to do or I guess would consider doing without a permanent CEO in place?

Well, what I will say about everything that we are focused on, the Board has a sense of urgency and the management team has a sense of urgency. And so while the CEO search is certainly a priority, we are not going to be standing still in the Interim. So when we see opportunities that we think are really going to be to the benefit of the business, we will move forward on them. Now whether or not that particular thing will be one of those things, can't speak to that at this point until we finish our evaluation of things. But we will not be holding off on actions that we think makes sense to really stabilize the company and move forward.

Understood. That makes sense. And just a quick one on the guidance. I don't think I heard anything pertaining to how buybacks may or may not be factored in. Are there future buybacks in the full year guidance? Robyn D'Elia: We do have plans for buybacks from the guidance. But again, we wanted to get the metrics that we were most comfortable with which is sales at the low end of the range and EPS at the low end of the range.

Yes. And what I will just add on that, one of the things that the Board will be doing is taking a look at the capital allocation approach for the company. And so we will be factoring into that the need to invest in the business to transform, to maintain stability in the business and we will also be evaluating how we want to return cash to shareholders through both dividends and/or share repurchases.

Our next question comes from Zach Fadem from Wells Fargo. Your line is now open.

Hi. This is Eric Cohen, on for Zach. Thanks for taking the question. You commented earlier that historically Bed Bath has just not kept up with changing consumer behavior and you mentioned that you are going to make updates to that store experience. Can you sort of comment on what changes we can expect to see? And maybe when we can sort of see them in the store to impact the sales or margins?

Well, what I will say is, we continue to have quite a few initiatives underway in that area and that is core to what our Next Generation Lab store initiative is all about is being able to test those concepts, see what's working, tweak it as we go, roll out things that makes sense across the chain. So to say specifically at this moment what those things are, it's probably a little premature because we are continuing to evaluate the performance in those stores and make those decisions.

Fair enough. And then can you just also comment the change you are making to the coupon strategy? I thought that was actually a gross margin benefit this quarter. Just sort of how changes you have made and presumably this led to some loss sales that you are comfortable with loss sales on the table? And just sort of how your prices stack up versus peers? Robyn D'Elia: Well, from a coupon perspective, we looked at the mix of offers, availability of coupons and then also having some coupon exclusions. So from a rate of growth of sales, it is favorable this quarter. And there was a decrease this quarter that contributed to our gross margin.

Our final question comes from Brad Thomas from KeyBanc Capital. Your line is now open.

Hi. Good afternoon and thanks for squeezing me in here. Let's see. I wanted to just follow-up on the review of the different concepts and over the years the company has not wanted to disclose revenues by segment or profit by segment. But I was wondering if there's any more quantification or color that you might be willing to provide today about how the different businesses are performing?

Unfortunately no, there's nothing more that we are going to provide today on a concept basis, because you are right, we have not in the past given those numbers. And so for now, we are going to continue in that path, but you can be assured that we are going to be evaluating the concepts and looking at all of those businesses and making appropriate decisions.

Got you. Thank you. And if I could follow-up then on maybe the cost expense opportunity, recognizing that there could be some moving pieces between the line items versus the way you guided earlier in the year, I guess, Mary or Robyn, could you talk a little bit about how you are thinking about the expense opportunity into 2019 and maybe how much you could bring that SG&A line down by this year?

Well, I won't attempt to quantify it, but as I did say in my prepared remarks, SG&A and rightsizing for the business that we are managing right now is a top priority for us. I think that we just have to look at that. And so, we have been looking at it. We have lots of initiatives underway. We have been executing initiatives in the SG&A area. But we are going to continue our focus there and accelerate some of the activities that's underway.

Okay. Thank you.

Ladies and gentlemen, that is all the time we have for questions today. I will now turn the call back to Janet Barth for closing comments.

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

Thank you, ladies and gentlemen. That concludes today's conference. Thank you for your participation. You may now disconnect.