Hello, everyone. Thank you for joining us, and welcome to the Q1 2026 Bed Bath & Beyond, Inc. Earnings Conference Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Melissa Smith, General Counsel and Corporate Secretary. Melissa, please go ahead.

Thank you, Operator. Good afternoon, and welcome to Bed Bath & Beyond Inc.'s first quarter 2026 earnings conference call. Joining me on the call today are Executive Chairman and Chief Executive Officer Marcus Limonis, President Amy Sullivan, Chief Financial Officer Adrienne Lee, and Chief Operating Officer Lisa Foley. Today's discussion and our responses to your questions reflect management's views as of today april 27 2026 and may include forward-looking statements including without limitation to statements regarding our future business strategy goals financial performance outlook for the remainder of the quarter or any other period anticipated growth stock price profitability macroeconomic conditions the value of any of our brands and investments relationships with third parties and agreements we are entering into with them margin improvement, expense reduction, marketing efficiencies, conversion, customer experience, changes to brands or websites, product offerings, the merger agreement with the container store, blockchain and tokenization efforts and strategies, and the timing of any of the foregoing. Actual results could differ materially from such statements. Additional information about risk, uncertainties, and other important factors that could potentially impact our financial results is included in our Form 10-K for the year ended December 31, 2025, in our Form 10-Q for the quarter ended March 31, 2026, and in our subsequent filings with the SEC. During this call, we'll discuss certain non-GAAP financial measures. Our filings with the SEC, including our first quarter earnings release, which is available on our Investor Relations website at investors.beyond.com, contain important additional disclosures regarding these non-GAAP measures, including reconciliations of these measures to the most comparable GAAP measures. Following management's prepared remarks, we will open the call for questions. A slide presentation with supporting data is available for download on our Investor Relations website. Please review the important forward-looking statements disclosure on slide two of that presentation. With that, Marcus, it's all yours.

Thank you so much. I am both honored and privileged to be serving as of January 1st as the CEO of Bed Bath & Beyond, and I want to thank everybody for joining. Over the last two years, our company has been focused on rebuilding this business, reconstructing the cost structure, and lowering the hurdle for profitability with an intense amount of discipline and tough decisions around headcount, legacy technology and the cost of acquiring and retaining our customer base the objective has been to reposition the company for growth with a definitive point of view of reclaiming profitability coupled with long-term durability that work was not about short-term fixes or temporary solutions it was about making structural changes to how we operate by simplifying the organization removing layers materially reducing our cost structure and aligning the team around a clear and consistent set of priorities focused on the homeowner asset allocation and data these priorities have not changed we're focused on driving top-line growth operating profitability and building something that is unique durable and meaningful in the home space In many cases, those decisions were not immediately visible in the numbers. Last couple years were rough. Declining revenue while dramatically improving margins and lowering the cost structure created short-term pressure on the perceived value of our company. Those changes were necessary because without resetting the foundation, there was no path to substantive profitability or to building something with purpose that would last. I knew the changes would take time to show up but that when they did they would appear in a way that were durable and repeatable. This is the eighth quarter has improved. Back in January when I laid out our home three pillow ecosystem we as a team committed to inflect top-line growth while continuing to reduce costs. We We delivered revenue of approximately $248 million, up 7% year-over-year, or 9.4% when you exclude our discontinuing operations from Canada, which marks the first time in 19 quarters that this business has delivered year-over-year growth. That result occurred concurrently while our operating costs for the quarter reflected the lowest operating cost structure in over 12 years the growth we are seeing is emerging from a fundamentally reset operating mindset not incremental spending or short-term activity that shift becomes clearer as you look beneath the top line we're acquiring our customers more efficiently our own channels are performing better and the engagement we are seeing is higher quality as the quality of the business improves the financial performance begins to reflect it adjusted EBITDA improved by five million dollars year over year and our net loss improved by 24 million dollars at the same time the underlying trends are moving in the right direction we're encouraged by the stability of our active customer file with returning customers and orders delivered improving sequentially these trends are important because they show that the foundation is not only holding up but it's beginning to build stabilizing the business was never the end goal it was just my starting point everything we are building starts with a simple idea the home is not a single transaction it is a life cycle that unfolds over time providing us with an opportunity to use technology and data to create lifetime value from every single customer relationship on average on average home approximately 11 to 12 years and during that period they move in maintain their home improve it finance it experience life events and eventually transition out of it historically those interactions have been fragmented across different companies and disconnected systems. What we are now building is a connected approach. As a reminder, we have organized the business into three pillars that reflect that life cycle. The omnichannel platform is where the relationship begins. Yeah, the retail business online and in store. Our products and financial services platform allows us to participate more deeply in the economic activity tied to the home. And our home services platform, maybe the one I'm most excited about, brings us directly, physically into the home. Earlier this quarter, we complete the first acquisition of our omni-channel pillar with the Kirkland transaction. We acquired strategic real estate, a product development and sourcing organization second to none, and exceptional management. Additionally, we announced the deal to acquire the container store. That transaction gives us trophy real estate that is wildly underutilized, a world-class distribution and supply chain system, and a home services business with Alpha and Closetworks that will move into Pillar 3, a foundational culture and process that will sit at the hub of Pillar 1. And it comes with exceptional leadership as work the capabilities our businesses and our customers want and eliminate all of the redundancies and inefficiencies quickly pillar two our product and financial services group is just getting started and as noted previously will include property and casualty insurance and home warranties through a nationwide relationship with brown and brown insurance via the beyond home agency. It will also include America's first homeowner credit union in partnership with a leading credit union. Additionally, this pillar will include our credit card program and product warranty. The transaction agreed to in principle that includes a real estate brokerage, home title company. This acquisition would not only create an origination engine for the overall ecosystem, but through technology and AI will allow us to meet and transact with tens of millions of customers without a traditional cost of acquisition the final pillar and potentially the most exciting is pillar three our own services business early this quarter we announced the intent to acquire f9 brands which includes cabinets to go lumber liquidators and southwind building products this acquisition would serve as a platform transaction bringing unbelievable executive management, warehouse and supply chain capabilities, and over half a billion dollars of revenue. Attached to that platform, we're part of the container store transaction. Lastly, we've agreed to, in principle, to acquire a nationwide network of installation and renovation professionals. We believe that's part of building our mode. Together, we believe this creates a high-margin pillar that is defensible against e-commerce competitors and firmly differentiates our company as a service provider regardless of what's happening with the economy but what is equally important that one on what how we are building this business we are not of scale we are acquiring many of these businesses and brands that i mentioned have had decades of success but struggled more recently as standalone entities they became burdened with fixed costs duplicative infrastructure and inefficient cost structures and debt that limited their ability to perform what we see is something very different we see capabilities that fill specific roles across our white paper for the entire homeowner life cycle when you think about the white space of homeownership each of these businesses represents a critical function that that customer needs over time across those 11 or 12 years. Our strategy is to extract those capabilities, preserve what makes them valuable, and eliminate, very strongly eliminate, the layers of cost and inefficiency that came with operating them independently. We preserve what works, we remove what does not work, and we connect everything through a single system that allows that single operating connectivity system to work for the consumer. When we bring those capabilities together inside of one platform, supported by shared infrastructure and a unified data lake and a single customer identity, they become significantly more powerful together than they ever were apart this is where our model is fundamentally diverges from traditional consolidation most consolidations focus on cost removal that's part of our model and we'll continue to eliminate those costs and inefficient operating expenses including underperforming assets but the real opportunity is not just cost the real opportunity is the revenue that we believe we can create by understanding that single sign-on unified customer layer. Giving each of these brands and each of these businesses an opportunity to cross-promote inside of one big data lake. Through technology and artificial intelligence, we are building a system that allows us to engage with the same customer across multiple needs over time, dramatically lowering our cost of acquisition lifetime value that customer could offer us each of these businesses has built and retained its own customer base by bringing those customer bases together into a single ecosystem we create a competitive advantage that allows us to grow revenue at a disproportionate rate compared to standalone competitors it's over 100 million unique homeowners that's not theoretical It's structural, including Overstock, Bed Bath & Beyond, the Container Store, Bye Bye Baby, Kirkland's, Lumber Liquidators, Alpha, Closet Works, and Cabinets to Go. Along with our partnerships across insurance, credit, warranties, and our planned acquisition in brokerage, mortgage, title, installation, and renovation, what we are assembling is not a collection of businesses. It's an ecosystem. system. Each business contributes a capability, each capability strengthens the platform, and together they create something significantly more value than the sum of its parts. Each of these pillars has value independently, but the real value is when they work together. That's what allows us to move from serving a customer once to serving the same customer repeatedly over time. With that, I'll turn the call over to Adrienne.

Thank you, Marcus. I'll now turn to our first quarter financial results. Revenue increased 7% year-over-year in the first quarter and 9% if you exclude the impact of discontinuing our Canadian operations. AOV improved 6%, driven by our continued focus on improving assortment, driving a healthy mix into living room furniture and patio on the bed-bath site, and an increased sales mix into overstock. Orders delivered increased by almost 1% in the period. Gross margin landed at 23.9% for the quarter, a decline compared to the same period last year, but still within the bounds of our operating range. We maintained effective discounting tactics, partially offset by lower sales and marketing expense, lapped loyalty points breakage from 1Q25 and saw benefits from improved carrier costs and exiting underperforming operations. Sales and marketing expense had improved efficiency of 50 basis points as a percent revenue versus last year. This result was driven by discipline spend in paid and improved return in own channels. G&A and tech expense of $36 million decreased by $5 million year-over-year, or $8 million if you exclude the impact of one-time cost from acquisition-related activities. All-in, adjusted EBITDA came in at a loss of $8 million, a 41% or $5 million improvement versus the first quarter of 2025 reported adjusted diluted eps with a loss of 25 cents per share a 17-cent improvement year over year we ended the quarter with cash cash equivalents and restricted cash of 163 million cash used in operating activities improved year over year by more than 39 million or 77 illustrating stabilization of operations in the quarter we invested approximately 26 million in acquisition related activities with that i'll turn the call over to amy thank you

adrian our focus on the operating side is simple translate the strategy into consistent disciplined execution and ensure that as we scale these capabilities we do it in a way that is efficient scalable and built to drive sustainable returns this work is being led by a strong operating team Lisa is driving execution across operations and shared services while Kyla who we announced this afternoon is leading our technology transformation together they are building the unified data and intelligence layer that connects the ecosystem and enables how we operate and scale today the majority of our revenue is driven by an asset light increasingly productive e-commerce platform we're We're pairing that strength with a fleet of more than 320 stores, allowing us to serve the customer across channels while improving productivity and return on assets. As we scale, we are focused on identifying the capabilities that truly drive performance and building around them, while decisively eliminating the inefficiencies that come from operating as fragmented, layered businesses. across the fleet we are evolving our store formats with clearer roles and stronger economics while taking a disciplined approach to underperforming locations through repositioning consolidation or exit where returns do not meet our thresholds that same discipline is driving our merchandising strategy where we are simplifying assortments improving margin productivity and strengthening vendor partnerships. Across the organization, we are simplifying how we operate, consolidating systems and teams into a unified platform while removing layers that slow decision-making and limit efficiency. This approach extends to our data and engagement layer. As announced this morning, our partnership with BILT accelerates a unified customer identity and loyalty foundation across the portfolio, strengthening engagement and lifetime value across all our brands. Customer service is central to this transformation. As we consolidate these functions, we are raising the bar across every single brand and every touchpoint so the customer experiences consistency regardless of how they engage with us. This is about building an operating model that scales, retaining what drives value and removing what does not as we continue to integrate new capabilities into the platform that same approach will apply across the ecosystem ensuring we preserve what works and remove excess complexity across retail products and financial services and home services the result is a simpler more transparent and more accountable organization with a cost structure designed to drive profitable growth. With that, I'll turn back to Marcus to close.

Thanks, Amy. What you're seeing this quarter is early proof of a model that is beginning to come together. Look, we've stabilized the core business, demonstrated that we can grow revenue while removing costs, and established a framework that allows us to build on that foundation with confidence. As we continue to add capabilities into the platform, we expect those capabilities to contribute not only to the efficiency but to the incremental growth across the system over time. Importantly, this is not a model built solely on cost reduction. While we will continue to remove duplicative and inefficient operating expenses including underperforming assets, a larger opportunity is the ability to drive revenue through a connected system powered by data technology and artificial intelligence that over the next nine months as we bring these pillars together and fold in these companies with their capabilities we will remove an additional sixty million dollars of cost out of the consolidated company while simultaneously strengthening our ability to grow more efficiently as we approach our shareholder vote on May 14th, we are asking for your support as we continue to execute this strategy. For those of you who have been long-term holders of our company, we appreciate your trust. For those who are newer to the story, we believe there's nothing more meaningful than the opportunity ahead. We have work to be done to reset the business. We think we're well on. I want to thank Adrienne Lee service that she has provided this company. She has been by my side as we have taken the current business down to the studs. We've developed a new operating strategy and have seen the fruits of that labor pay off from our team's hard work in the first quarter. Brian LaRousse, who came with the container store acquisition and has been an omnichannel retail products and services space will be joining our company he's joining us here on the call today but it is important to recognize that we have seen a lot of changes in the last couple of years and to adrian and all the folks that helped us get to this point we are grateful to the new companies and new executives who are joining our company like jason like amy like brian we believe that the future is very bright. So we'll move into the formal Q&A session.

Thank you. We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. if you are muted locally please remember to unmute your device please stand by while we compile the q a roster your first question comes from the line of stephen forbes from guggenheim your line is open please go ahead everyone hey marcus during the upcoming transition right the upcoming transition of the container

store locations. Curious if you can maybe just speak or give us a sneak peek in the amount of space you plan to merchandise with Bed Bath & Beyond products. What's some of the key merchandising features you're going to be reintroducing to the consumer with these refreshes? And then if you can, like how you sort of expect sales per square foot to change over time as we look out, you know, call 24 months and stuff.

Yeah, that's a great question. I think it's important to delineate the two omni-channel businesses that we have purchased. Kirkland's with its small format, what I consider under market real estate, meaning that we believe we acquired leases that are under market about 230 to 240 of them. They range from five to about 10,000 square feet and you've heard me talk about them over the last year. The reason that we slowed our pace down of converting many of them to bed bath and beyond home stores and as we looked at the numbers we just didn't feel like we had all of the categories that we needed and while we did the economic you know standoff with the current owners of tcs i knew that eventually we would get that transaction to fold in with the pressure that we were putting on that business so in addition to the 100 container store locations we will have at least 100 small neighborhood format locations of Bed Bath and Beyond slash container store, container store slash Bed Bath and Beyond. As I move to the container store specifically, for the last 18 months, I've been studying this business, visiting every single store. I've been to, I think, 93 of the 100 already and spend a lot of time really trying to understand what they had what they had too much of uh how their sales per square foot were functioning how they used to function how the custom spaces function and what i came down to is one simple conclusion across the 100 locations there was 2.2 million square feet of retail and in my opinion half of that maybe slightly more was wildly underutilized with triple facing skews with with in my opinion certain categories far too wide and not deep enough and with uh with an attempt to address certain categories that i felt felt very short rather than thinking about walking into the store and expecting to see bed bath and beyond on the left and container store on the right i would rather you thought about it as general merchandise in one specific area that includes storage and organization, kitchen, bath, bedroom, a little bit of decor and other impulse items that may be seasonal relevant on one portion of the store and the other portion of the store would be filled with custom spaces and design spaces which would include alpha, closet works, gracious home cabinetry which is a higher version of cabinets to go and gracious home flooring which is a higher version of lumber liquidators leveraging their existing supply chain and expertise so that when a consumer walks through the door it is my goal to take it from an average of about 220 dollars per square foot i think we can get to 500 a square foot within 24 months now nobody should be applauding or patting anybody on the back for five hundred dollars a square foot the true number to get to the seven percent ebitda contribution on a four wall basis is it takes about six hundred and fifteen dollars a square foot but it takes a very good balance between general merchandise and the home services business and the reason that i create that delineation is that the blended margin of general merchandise should be in the 35 to 37 percent range and the blended margin of the home services business is north of 60 percent. So we want to make sure that we're allocating not only enough talent, training, and resources to the home services, but we need that blended margin to come in north of 40 for us to see the kind of EBITDA margins we know give us the kind of returns on investment we need.

That's super helpful. And then maybe just a quick follow-up and more of a clarification for myself and maybe the group on the line here. The goal to remove $60 million of costs, right, that's sort of post all the announced acquisitions over the next nine months. And I don't know if you can maybe just frame up for us, like, what is the end state of that?

Does that bring the business to a positive free cash flow state? or is there still more work to be done whether it's you know sales growth or you know greater productivity initiatives to get to get to a free cash flow positive state it is my belief that if we continue with low to mid single digit revenue growth in our primary business and we're able to stabilize the margin as we have for the last 12 months continue to stabilize it and we're able to expand the home services business, the $60 million of eliminated costs puts us way ahead of needing to worry about being cashflow positive. My goal is to get this business to a 6% to 7% EBITDA margin business. And to be candid with you, if you go back and look at the amount of costs that have been taken out of just the original overstock business, which is north of 100 million dollars one should assume that my 60 million dollar number is very conservative what i want to be realistic about is that i want to make sure that we make the right decisions the right decisions on what locations on what headcount to eliminate but i have to be unfortunately brutally clear and honest with everybody both internally and externally with the formation of AI outside of our business and now being deeply integrated in our business and us only wanting to take on capabilities that we think add value, we're going to experience significant reduction in headcount. It's significant. And in some cases, some of that reduction will be redeployed in areas where we think we're under nurtured. Customer service does not have enough to my liking the amount of staff qualified trained staff in the stores upselling customers designing for customers servicing their home for customers is not enough but we are going to become an organization that puts his payroll in the field that puts his payroll generating revenue and does not put his payroll in corporate offices with big leases and lots of warehouses So we will be eliminating supply chain costs. We will be eliminating IT, accounting, marketing, merchandising, etc. across the entire platform. And it's never a good thing to do that. But if you go back and you study the independent financial statements of all these businesses, just in a normal mid-cycle environment. Container store is an example. Prior to COVID, $90 million every year. Kirkland's, $25 million every year. We know what Bed Bath can do. We know what Bye Bye Baby can do. The problem is we're living in a different world. And this particular forecast and model that I'm talking to you about today assumes no inflection in the housing market. this business to neutral or slightly positive in this kind of economic environment that we're living at today, where the 10-year treasury is north of four, where mortgage rates are north of six. And while I don't have a crystal ball that will tell me when south of four and south of six are going to happen, we are going to take out all the costs to prove that we can be a break-even company in an environment like this. What does that tell you? You get to a mid-cycle environment And you're not talking about 4, 5, 6, 7% increases in revenue. You're talking about low double-digit increases in revenue, 10, 12, 15%. And if the cost structure is right and the sourcing is right, then our profitability will be where it's supposed to be.

Thank you.

Your next question comes from the line of Thomas Forte with Maxim Group. Your line is open. Please go ahead.

Brian, welcome to the call. Adrian, it was a pleasure working with you, and I wish you all the best in your future endeavors. So, Marcus, I have one plain vanilla question, and I have one swicey one. Let's start with the plain vanilla first. So, can you give your current thoughts on your decision tree for building, buying, or partnering to advance your three pillars?

Very simple for me. on a whiteboard back on december 31st while everybody was out having a party i drew out what i thought the homeowner timeline was to owning a home in one simple cycle and it's about 11 or 12 years and i thought about every single thing that the homeowner would do right before they decided to buy all the way to the point that they made the decision and closed on the sale they bought 11 years ago and i started to think about all the needs both the products the services the financial needs that they would have the insurance needs that they would have the life events that they would experience and started to map out on a giant whiteboard what were all the types of products and services that were missing to be able to do this now most of you know what my background is for 25 years i had the blessing of being able to build a business that is an ecosystem around one particular lifestyle and i understood that in order to do that you had to aggregate all these products and services and as you did that the moat would get deeper and deeper and deeper and the goal here is to not only build the moat but to be part of the homeowner's life cycle not just once but multiple times what's missing for me tom what was always missing is that it's great to sell couches and patio furniture and containers and decor for your home and flooring and all those things but the reality of it is is that the cost to find that customer the cost to acquire that customer retain that customer is what led most of those companies to have to take on debt take on lots of different expenses, take on layers of personnel, and allow them, force them, to not be as successful. As I started studying all the things that were available in the marketplace, it is true, I do like distressed things. I like them because for my shareholders, we get a good deal. but we only get a good deal if we recognize that extracting capabilities and discarding duplicative costs have to be the the mandate has to be the discipline when i listed off all those ago or two years ago everybody would have imagined anybody would have imagined that all those brands can be part of one system i think is missing is how it all interconnects and i'd like to have amy talk about that and then we'll get on to your other questions yeah so we we announced our partnership um with built this morning and i think that's a really important sort of moment to think about

the sort of red thread that goes through all of these brands and so when you think of the cost of customer acquisition and the desire to make those customers trust our brands and be the most loyal they can be to us we believe the partnership with built begins to build that entire network for us of how we link our brands together within our own ecosystem and how we link our brands within the neighborhood that he or she lives in and so that partnership is really the part that begins to tie this together both lisa who i'm who is joining us on the call today and kyla who's an amazing new talent that we added to our team will be part of driving that with us but there are

parts of our business that are just such a natural match for what built already does with renters that we believe we can benefit from what they have already built as well as partner together on things such as the financial services pillar of our business that we want to do together with built great thanks and then for my follow-up so marcus you're about as sure as they come and i appreciate all your efforts to drive shareholder value i was curious what you thought of the following would you consider converting any of the container store locations to ai compute centers given their close proximity to urban city centers the answer is no we don't want to play games with having AI be part of our boxes but what I can tell

you definitively is that in our new team member Kyla who's joining our team and Lisa who's now our chief operating officer the two of them have been insanely focused on eliminating headcount and eliminating cost by layering in AI as part of all of our business and even when we start to look in the accounting or the risk mitigation world where we're managing payables or managing receivables or managing Treasury this is a technology business first the problem was is that the technology that we've been working through and getting rid of was a decade or two old but doesn't make it bad it just makes it not current and And so while we're not gonna turn any of our locations into AI centers, we are gonna turn our business into an AI-centric business, not because it's fun to say or we think it's gonna drive our stock, but because we know it's necessary to be competitive. We know the customer expects it to get information that's curated for them. And we know that in order to efficiently market our business and get our marketing costs down back into the 12 or lower range we have to be far more efficient with everything.

Marcus thanks Amy. Thank you.

Your next question comes from the line of Alicia Rees with Wedbush. Your line is open please go ahead.

Thanks for taking my questions today. First you know just following up on the last question you had mentioned in your prepared remarks of course that the containers for real estate is wildly underutilized. Just wondering if you can speak to some possible uses, if it's not for AI data centers or anything of that manner. What possible uses have you considered so far?

So when I take a typical store that's around 22,000 square feet, those stores have been generating a decent amount of revenue with general merchandise that the container store historically hold held and sold alpha closets and a few other custom closet systems as we acquire businesses across the home space it is our expectation that all of them in some form or another will have a physical presence there and whether that is providing cash offers on real estate or allowing a title closing to happen there or allowing somebody to come prepared to take their son or daughter to college or getting ready for the christmas holiday or picking out new floors for your newly bought house or designing a new kitchen we want to make sure that every single square inch of those 22 000 square feet are intensely utilized when i talk to you about the quality of this real estate for those of you that know the container store in your own town it is the cream of the crop real estate but one of the things that i think brought container store to a tough spot is that it didn't have a broad enough offering for the home it was very niche and as the internet came to be more predominant it lost a little bit of its competitive edge as the economy got tougher it lost a little bit of its competitive edge historically the container store has served the customer that was probably two hundred thousand dollars a year in household income we believe that the addition of bed bath not only widens but the offering widens as well I would expect that within 24 months 22,000 square feet when you incorporate all the home services of the general merchandise and you can quote me on this should be double and I don't think anybody in our company believes that that's a pie-in-the-sky number only because the company has done it before. So we want to utilize those to meet customers, serve customers, and to have every pillar in our company, including our potential brokerage business, our credit union business, our credit card business, all of those businesses extract value.

What we like to say internally is we're going to sweat the assets and get every last drop of revenue that that piece of property was intended to give us thank you for detailing that i'm wondering if you could also speak to the product mcshifted at the original overstock.com site and how you're how you're honing that to what extent you're layering products from the other businesses now or steering people to other banners with under your um under your other businesses hey alicia i'll take that one so from as we think about all of the banners i do believe they each fill a unique portion of the home segment of the business.

And so as Marcus just described in the container store real estate, in our largest stores, for example, there's an opportunity for all of those things to be represented. But when you get back to the e-commerce business, there's a massive opportunity for each of those to be more thoughtfully curated to what we all expect from those brands. Overstock specifically has really been headed in the right direction in terms of its focus on patio rugs and furniture as well as sort of an eyedropper amount of the fashion luxury space that does so well on that site bed bath and beyond is probably where we have the most opportunity to sort of fine-tune and make sure that that business is the best of what we remember of bed bath and beyond while still protecting some of the growth that we've sort of acquired over time with that legacy overstock customer um so i think there's tremendous opportunity to curate each one of them but really bring it together in the store footprint i want to add a little bit to that you know overstock is run by an unbelievable woman who came back to the company

because she liked the direction that we were going and has brought in a whole new supporting cast of merchants underneath her and really if you think about overstock in its best days was great brands and big ticket items at unbelievable prices you can expect that even by the end of the year I don't want anybody to like overreact to this but even by the end of the year in addition to selling patio flex watches Gucci handbags we will be selling cars that anything else that we believe fits into the four corners of the property in the four walls of the house we're not going to be the sellers it's a marketplace and we rely on the best companies the best brands and the best supply chains to satisfy them but i think overstock when i look at all of our e-commerce businesses separate from getting normal improvement out of that bath the normal improvement out of the container store overstock is the one that has the most potential to be a massive brand again on a trailing 12 months we're back up around a quarter of a billion dollars and every day we're seeing seven eight hundred thousand dollars a day we know that it needs to be unlocked and unleashed and we've always been trying to manage our priorities while trying to get to profitability as we bring on these other businesses we start to add billions of revenue container store lumber starting to dance in the two plus plus plus billion dollar range and when you start to add all that gross profit and you extract the costs that come with those you start to get into profitability within a year or two in a material way, in a material way. Overstock is like that prize jewel box that doesn't get enough attention, but it will continue to get the attention. We expect the growth to continue to be low double digit like it has been over the last 12 months.

Your next question comes from the line of Jonathan Matuszewski with Jeffries. your line is open and please go ahead great good afternoon and thanks for taking my questions uh my first one marcus was just on you know a theme that's emerging here and that's kind of potential revenue synergies from cross marketing across the businesses that you've been aggregating so how should we think about kind of measuring progress there as you think about the the separate customer files today? Where does cross shopping stand before integration? And are there any kind of milestones that you have in terms of measuring as these businesses come under one umbrella? That was my first question. Thanks.

We've been working with a firm out of Canada, Lisa Foley, our chief operating officer, has to really understand how to create one single data layer and that data layer takes the entry point of any customer in any brand at any moment in time and ingest them into that data layer ultimately what we want to do is ensure that we do that address and that person and we create two unique identifiers the first is the homeowner or renter it's an important distinction both the homeowner or renter themselves and their behavior and their historical purchases so we know who they are and what their preferences are that's the first unique unique sign-on the second is the home itself and i liken it to the automobile when you are in the automobile business and you're trying to grow any portion of that ecosystem you think about the car and you think about the VIN number and there's a term called VIN explosion which allows you to understand a heck of a lot more about that car and its journey through its lifecycle including repairs maintenance accidents insurance everything dress the same way so the single sign-on with the customer tells us about over time with all of these partners including title mortgage credit cards and all of these other brands that we talked about we want to be able to gather everything about that address that you can imagine. Not only the purchase price, not only the score footage, permits, titles, deeds, surveys, mortgages, and you can expect is also that the transfer of information for the homeowner, transferring it for themselves, or for the home itself, transferring it from one owner through title to another owner, should be able to transfer that proprietary data information on that home as well. As we understand those two single sets of data, we then create journeys that allow us to communicate with those two assets uniquely based on where we think they are in their 11 or 12 year life cycle. As we think about where they are in that journey, Lisa's done an unbelievable job of starting to craft the way we communicate with those different assets in giving them the right offer at the right time would capture something there as opposed to this you know spraying effect where every customer gets every email every single day it is not a perfect science today which is why amy and lisa fought really hard to bring kyla into our organization she has transformed multiple companies on the digital and ai transformation roadmaps and believes when we interviewed her that she could really help layer this simplicity to ingest the data, to understand it, and to communicate back to it in a way that we don't believe any other company in the home space can do it for one simple reason. There is no other company in the home space, not Home Depot, that will have as many touch points across those 11 years and as many entry points into the life cycle as we have making acquisitions and so whether it's buying a brokerage and knowing that that's a hot origination today or doing a heloc on blockchain with somebody today or selling somebody a crib today we know that all those moments create opportunities to bring them into our system and keep them through life really helpful marcus and then just a quick follow-up

you know, as we think about the core business, I think you mentioned some progress on improved repeat spend. So, just wanted to ask about kind of customer loyalty and maybe if you could frame it in terms of just an update on the Welcome Rewards Program. You know, where is that today in terms of enrollment?

How productive is that customer and what's possible ahead with all the changes you're making to to merchandising and whatnot thanks you got it well first and foremost the e-commerce business is not our core business anymore our core business is the everything home business and everything that's around it particularly when you look at the revenue and margin contribution the e-commerce business coupled with our with our retail business is our omni-channel business that's pillar one and those other pillars significantly to make sure that we are addressing everything that that homeowner wants as it relates to our will be ingested by

our bills so as we think about the built program i would think of that as sort of the halo over all of the loyalty programs in our system and so we want to be able to recognize that if someone is a bye bye baby customer or a cabinets to go customer that that's how they entered the system But we want them to be able to earn in the whole ecosystem of Beyond Rewards, which will be powered by BILT so that those points can be leveraged and traded from anything from a crib purchase over to Bed Bath & Beyond to how you think about mortgage and our financial services businesses as well. So we're less focused on Beyond Rewards as a standalone reward program and more appropriately focused, I would say, on building out this entire ecosystem that I believe she will find far more value in as she shops all of our brands.

Thank you.

Best of luck. hey Jonathan one thing before you go it is really important and it's a big shift because you know over the last 24 months all we've been talking about is taking revenue down and getting rid of skews and getting rid of negative margin vendors and getting rid of people and it's been a painful process which is why our stock is hopefully in my opinion why as we did these transactions with these other we were asking them to put their business their lifelong business in the hands of our business and they understood that what we were ultimately trying to build was something that had never been done before vicious it is or how it's not possible or how it's that isn't going to work and it really is very simple for me if you start by understanding data and how to properly catalog and how to prop and then you surround it by businesses in the same eco space we're not going to be off doing random things just because we have data then really what you've done is you've taken good brands with a lower cost structure with good talent playing in the same space and you've allowed them to play in a totally different sandbox what that ultimately means is that the customer should be the big winner because as they do business with us in one business they should be earning rewards and the one thing that we said to the founder of built when we did this deal and amy and i sat in their office is i'm only going to do this deal if we can build a model where if they buy a lot of they can earn enough points to have enough of a down payment to buy their first last 12 months about the lack of affordability company doing anything about it and we do it's break and whether that's brief checking and savings or bringing built to the forefront where the words at tens and tens of brands twenties of brands that ultimately is I think what's been missing from the general marketplace brands trying to stand on their own never gonna work brand brands trying to stand inside of a simple flatter ecosystem we think that's ultimately why this matters but it really is a data center we want to be known going far it happens to cut its teeth in the home space the largest tam in America by the

next question comes from the line of Bernie McTernan with Needham your line is open please go ahead great thanks taking the question was I was wondering if the better-than-expected results, at least relative to R.S.

Smith-2-1-2, impacts how you're thinking about the year at all, and maybe within that just any impact you're seeing either on the consumer or suppliers or anything you're hearing in the industry just in terms of higher gas prices impacting the macro?

We haven't seen gas prices change our demand trajectory, but we are holding steady with the guideposts that we provided earlier in the year, which is low-to-mid single-digit revenue growth. It is important that everybody understand one part very clearly. Terminating leases and doing all the unpopular things that are required. Brian has committed that we will clearly in our second quarter $13 million until April 1st. But I'm happy with what we're seeing. When we did the deal a while ago, there were 300 stores. There are now 240 stores. We may end at 210 stores. I am not taking any chances of any kind on deploying any of my shareholder assets on anything that I don't think we can get a return on. And what I'd rather do is be upfront about what we're getting out of it. When we look at the container store, there are already three leases that we have shaken hands on, gracious exit, and we aren't getting out of distribution centers. We are getting rid of lots of old contracts. And so as you look at the next couple of quarters, it is important to know that there will be incremental expenses. What we had laid out in the guideposts, Q2 will have about $13 million of one-time expenses. I would expect that Q3 will probably have, between TCS, around $13 or $14 million as well. We don't see as much in the lumbered liquidators' cabinets-to-go business. Jason Dells, who's the CEO of that company, runs a pretty tight ship, and he's feeling a little, I think he's getting a little FOMO knowing that he's got to get rid of some things as well. And then as we start to think about all the deals we're doing going forward, make those changes when we sign the deal. And so as you see other deals get announced here, you're probably going to see immediate and radical changes happening at the same time that we announce it. With Kirkland's tcs we don't we didn't own kirklands until april 1st and we don't technically own tcs until july 1st ish around that date we're lining it all up but we will have to purge the system nothing daunting and nothing monumental and nothing that we can't handle but we want everybody to know that there are some one-time things that we will lay out for people understood thanks Marcus.

And as a follow-up, with all these acquisitions set to close in relatively short order, how should we expect them to start impacting the larger company strategy? As you mentioned, there's a bunch of things that need to be done once deals close. So what's the timeline that we should expect these to be a positive influence in that connected home strategy?

I think in Q2, as an example, you know, based on when we closed and the time of year that it is, we'll see about $80 million in Kirkland, $75 to $80 coming out of Kirkland, it's a second half of the year business. We're still seeing nice revenue growth on the e-commerce business that, you know, low to mid-single-digit growth there. The only thing that you should expect to see in Q2 is about $13 million of one-time expenses. So whatever your consensus was, whatever your number was, and I don't know what it is on this call, I would add about $13 million to it. We're hoping to be a little bit better than that. And then the same thing would happen in Q3 with the closing of TCS. I would expect that we will have a forecast that looks pretty good in probably 30 to 45 days that will give you an outlook, a range, a guidepost, assuming the economy doesn't get any better with about six to 7% revenue growth on a cater for 27, 28, and 29. That's what we're hoping to show you guys in the next 45 to 60 days. And I think it'll be about what you would expect it to be. You know, the TCS business is about a half a billion dollars. It's about 350, 325, depending on how many stores we end up keeping the lumber liquidators cabinets to go business is about 500 million dollars the installation business that we're talking about the renovation installation business is about 60 million dollars and so we'll build all of that for you as we build this live together um but they'll fold in in case august september we should have everything closed that you've heard about today, that doesn't mean there won't be more tuck-in acquisitions that would fit into pillar one, two, or three based on what Amy wanted, Brian wanted, or Jason wanted.

Thanks Marcus.

We have reached the end of the Q&A session. I will now turn the call back to Marcus Limonis for closing remarks.

I don't have any closing remarks. We are happy that we were able to report Q1 and we're We're looking forward to exciting quarters ahead. Thanks for joining us.

This concludes today's call. Thank you for attending. You may now disconnect.