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DATE

Monday, April 27, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

  • President and Chief Executive Officer — Marcus Lemonis
  • Chief Financial Officer — Amy A. Sullivan
  • Chief Operating Officer — Lisa Foley
  • Outgoing Chief Financial Officer — Adrianne Lee

TAKEAWAYS

  • Revenue -- $248 million, a 7% increase year over year and 9.4% growth excluding discontinued Canadian operations.
  • Gross margin -- 23.9%, a decline from the prior year but within the stated operating range.
  • Adjusted EBITDA -- Loss of $8 million, a 41% or $5 million improvement over the prior year.
  • Net loss -- Improved by $24 million year over year.
  • Average order value -- Increased by 6%, attributed to living room furniture, patios, and Overstock category mix.
  • Orders delivered -- Increased by almost 1% compared to the prior year.
  • General & administrative and tech expense -- $36 million, down $5 million year over year, or $8 million lower excluding onetime acquisition costs.
  • Adjusted diluted EPS -- Loss of $0.25 per share, a $0.17 year-over-year improvement.
  • Cash and equivalents -- $163 million at quarter end.
  • Operating cash usage -- Improved by more than $39 million, or 77%, over the prior year.
  • Acquisition-related investment -- Approximately $26 million spent during the quarter.
  • Operating cost structure -- Lowest level in over 12 years, according to management.
  • Cost removal outlook -- Plan to eliminate $60 million of cost from the consolidated company over the next 9 months.
  • Omnichannel store footprint -- Acquisition of Kirkland's brings 230-240 under-market leases; plan for combined Bed Bath & Beyond/Container Store neighborhood format stores.
  • Real estate utilization plan -- Management expects to double per-store revenue in The Container Store real estate within 24 months.
  • Target sales productivity -- Goal to increase The Container Store's sales per square foot from approximately $220 to $500 in 24 months, aiming ultimately for $615 per square foot for target 7% EBITDA contribution.
  • Blended margin guidance -- General merchandise expected in the 35%-37% range; home services business above 60%; target overall blended margin above 40%.
  • Segment acquisitions -- Closed first omnichannel pillar acquisition with Kirkland's and executed a deal to acquire The Container Store; intent to acquire F9 Brands (Cabinets To Go, Lumber Liquidators, Southwind Building Products), and a nationwide installation and renovation network.
  • Financial services strategy -- In-principle agreement to acquire a real estate brokerage, home title company, and mortgage brokerage for ecosystem integration; launching insurance and warranty product partnerships via Beyond Home Agency and Brown & Brown Insurance.
  • AI and technology integration -- Intensified focus on cost reduction and scaling efficiency through technology and artificial intelligence, including planned headcount reductions and redeployments toward revenue-generating roles.
  • Loyalty & data unification -- Announced partnership with Bilt to unify customer identity and loyalty across all brands, with a single sign-on and data layer supporting customer lifetime value growth.
  • Store optimization -- Ongoing review and reduction of store count (e.g., Kirkland's from 300 stores down to a possible 210) and exit of underperforming Container Store leases to improve asset utilization.
  • Guidance for Q2 and Q3 -- Expectation of $13 million of onetime operating expenses in each quarter due to integration and restructuring.
  • Forward revenue growth targets -- Management planning for 6%-7% compound annual revenue growth (CAGR) in 2027-2029, assuming the current economic environment holds.

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RISKS

  • Marcus Lemonis stated, "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, is 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 its payroll in the field, that puts its payroll generating revenue and does not put its 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, et cetera, across the entire platform."
  • Management cautioned on near-term financials by highlighting, "as you look at the next couple of quarters, it is important to know that there will be incremental expenses. I believe that if you looked at what we had laid out in the guidepost, Q2 will have about $13 million of onetime expenses. I would expect that Q3 will probably have between TCS around $13 million or $14 million as well."
  • Marcus Lemonis emphasized uncertainty, stating, "this particular forecast and model that I'm talking to you about today assumes no inflection in the housing market. The goal was always to get this business to neutral or slightly positive in this kind of economic environment ."

SUMMARY

Bed Bath & Beyond (BBBY 4.81%) reported a return to year-over-year revenue growth for the first time in nearly five years, alongside the lowest operating cost base in more than a decade. Recent acquisitions of Kirkland's and a pending deal for The Container Store are intended to expand omnichannel distribution and integrate strategic capabilities across the home ownership lifecycle, rather than simply increasing scale. The company is implementing a data-driven ecosystem strategy focused on customer lifecycle engagement, with artificial intelligence and unified loyalty infrastructure at the core, including a new partnership with Bilt for cross-brand rewards. Executives outlined a 9-month plan to reduce operating costs by $60 million, restructure roles, and focus headcount on customer-facing and revenue-generating activities, while targeting EBITDA margins of 6%-7% through higher blended store productivity and expanded service offerings.

  • Management said, "This is the eighth quarter in a row where the bottom line has improved," indicating a track record of sequential profit improvement not previously highlighted.
  • The upcoming CFO transition from Adrianne Lee to Brian LaRose, who joins via The Container Store acquisition, marks a strategic leadership shift aligned with ongoing integration efforts.
  • The company disclosed over $0.5 billion in annualized revenue for the planned F9 Brands home services acquisition, with aspirations to build a defensible, high-margin service segment integrated alongside product offerings.
  • Bed Bath & Beyond's ecosystem buildout leverages proprietary technology and AI systems to aggregate homeowner data and transition from a single-sale retail model to continuous, lifecycle-driven engagement.
  • Cross-brand synergies will be pursued through a unified "single customer identity," allowing the company's brands—including Bed Bath & Beyond, Overstock, buybuy BABY, Kirkland's, Lumber Liquidators, Elfa, and others—to "cross-promote inside of one big data lake."
  • Executives stated that no Container Store locations will be converted to AI compute centers; instead, all locations will serve as multi-modal, high-utilization retail and service venues contributing to the broader home ecosystem.

INDUSTRY GLOSSARY

  • Bilt: A customer loyalty and rewards program platform enabling point accumulation and redemption across brands—including new mortgage and home services rewards for renters and homeowners—in partnership with Bed Bath & Beyond.
  • Pillar 1, 2, 3: Internal classification for Bed Bath & Beyond’s strategic business model—Pillar 1 (Omnichannel Platform: retail and e-commerce), Pillar 2 (Products and Financial Services: insurance, credit, brokerage), and Pillar 3 (Home Services: installation, renovation).
  • White space / white paper: The untapped opportunity across the homeowner lifecycle; in this context, Bed Bath & Beyond’s blueprint for new product and service integration.
  • Big data lake: A centralized digital repository aggregating structured and unstructured customer data from all brands, enabling single sign-on, unified customer identity, advanced analytics, and cross-brand engagement.

Full Conference Call Transcript

Marcus Lemonis; President, Amy Sullivan; Chief Financial Officer, Adrianne 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 risks, 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, and our Form 10-Q for the quarter ended March 31, 2026 and in our subsequent filings with the SEC. During this call, we will 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 2 of that presentation. With that, Marcus, it's all yours.

Marcus Lemonis: Thank you so much. I am both honored and privileged to be serving, as of January 1, as the CEO of Bed Bath & Beyond, and I want to thank everybody for joining. Over the last 2 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's 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 of 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 in a row where the bottom line has improved. Back in January, when I laid out our long-term plan with our Everything Home 3-pillar ecosystem, we as a team committed to inflect top line growth while continuing to reduce costs. That happened.

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 18 -- 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 $5 million year-over-year, and our net loss improved by $24 million. 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, homeowners remain in their home for 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 3 pillars that reflect that life cycle. The omnichannel platform is where the relationship begins.

Yes, 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 completed the first acquisition of our omnichannel pillar with the Kirkland's 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 stroking real estate that is wildly underutilized, a world-class distribution and supply chain system and a home services business with Elfa and Closet Works 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 well. Between those two, we will absorb the capabilities our businesses and our customers want and eliminate all of the redundancies and inefficiencies quickly. Pillar 2, 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 & 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 warranties. At the center of this pillar is a transaction agreed to in principle that includes a real estate brokerage, home title company and mortgage brokerage. 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 3, our home 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 $0.5 billion of revenue. Attached to that platform are Elfa and Closet Works Elfa organization systems, which were 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 moat. 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 and what I want to be very clear about is how we are building this business. We are not acquiring companies for the sake of scale, we are acquiring capabilities. Many of these businesses and brands that I mentioned have had decades of success but struggled more recently as stand-alone 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. Earlier today, we announced a partnership with Bilt 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 divergent 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.

By connecting these businesses 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 while increasing the 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 stand-alone competitors. It's over 100 million unique homeowners. That's not theoretical, it's structural. That is our business model.

When you look across the brands we've acquired and are in the process of acquiring, including Overstock, Bed Bath & Beyond, The Container Store, buybuy BABY, Kirkland's, Lumber Liquidators, Elfa, 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. Each business contributes to 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 Adrianne.

Adrianne Lee: 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 in the living room furniture and patio on the Bed Bath side and an increased sales mix in the 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 1Q '25 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 of revenue versus last year. This result was driven by disciplined spend in paid and improved return in owned 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 onetime costs 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 was a loss of $0.25 per share, a $0.17 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.

Amy A. Sullivan: Thank you, Adrianne. 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 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 touch point 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.

Marcus Lemonis: 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. All can expect that over the next 9 months, as we bring these pillars together and fold in these companies with their capabilities, we will remove an additional $60 million of cost out of the consolidated company while simultaneously strengthening our ability to grow more efficiently. As we approach our shareholder vote on May 14, 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 is nothing more meaningful than the opportunity ahead. We have work to be done to reset the business. We think we're well on our way. Before we head into the Q&A section, I want to thank Adrianne Lee for the years of 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 LaRose, who came with The Container Store acquisition and has been a very formidable CFO in the 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 Adrianne 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 section.

Operator: [Operator Instructions] Your first question comes from the line of Steven Forbes from Guggenheim.

Steven Forbes: Marcus, 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 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 12, 24 months and so?

Marcus Lemonis: Yes, it's a great question. I think it's important to delineate the two omnichannel businesses that we have purchased. Kirkland's with its small format, what I consider undermarket real estate. Meaning that we believe we acquired leases that are under market, about 230 to 240 of them. They range from 5,000 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 & Beyond home stores is 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 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 & Beyond/Container Store, Container Store/Bed Bath & 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 spent a lot of time really trying to understand what they had, what they had too much of, 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 SKUs with, in my opinion, certain categories far too wide and not deep enough and with an attempt to address certain categories that I felt fell very short.

Rather than thinking about walking into the store and expecting to see Bed Bath & 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 Elfa, 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, but 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 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 $500 a square foot. The true number to get to the 7% EBITDA contribution on a 4-wall basis is it takes about $615 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% range, and the blended margin of the home services business is north of 60%. 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.

Steven Forbes: 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 cost, right, that's sort of post all the announced acquisitions over the next 9 months. And I don't know if you can maybe just frame up for us like what is the end state of that? Is 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 sales growth or greater productivity initiatives to get to a free cash flow positive state?

Marcus Lemonis: 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 cash flow 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, one should assume that my $60 million 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 to close, the right decisions 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, is 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 its payroll in the field, that puts its payroll generating revenue and does not put its 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, et cetera, 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 as 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 buybuy 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. The goal was always to get 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 4%, where mortgage rates are north of 6%.

And while I don't have a crystal ball that will tell me when south of 4% and south of 6% are going to happen, we are going to take out all the costs to prove that we can be a breakeven 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.

Operator: Your next question comes from the line of Thomas Forte with Maxim Group.

Thomas Forte: Amy and Brian, welcome to the call. Adrianne, 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 spicy one. We'll 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?

Marcus Lemonis: It's very simple for me. On a whiteboard back on December 31, while everybody was out having a party, I drew out what I thought the homeowner time line 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 close 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 the giant whiteboard, what were all the types of products and services that we're 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 homeowners' 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 has to be the mandate, have to be the discipline.

When I listed off all those brands, I don't think a year ago or 2 years ago, everybody would have -- anybody would have imagined that all those brands can be part of one system. But the thing that 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 question.

Amy A. Sullivan: Yes. So we announced our partnership with Bilt 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 Bilt 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 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 Bilt 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 Bilt.

Thomas Forte: Great. And then for my follow-up, so Marcus, you're about assure 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.

Marcus Lemonis: 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 costs 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 2 old. That doesn't make it bad, it just makes it not current. And so while we're not going to turn any of our locations into AI centers, we are going to turn our business into an AI-centric business, not because it's fun to say or we think it's going to 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.

Operator: Your next question comes from the line of Alicia Reese with Wedbush.

Alicia Reese: First, just following up on the last question. You had mentioned in your prepared remarks, of course, that The Container Store 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?

Marcus Lemonis: 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 held and sold Elfa 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 nichey. 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 $200,000 a year in household income. We believe that the addition of Bed Bath not only widens the funnel for that customer, but the offering widens as well.

I would expect that within 24 months, the revenue coming out of those 22,000 square feet when you incorporate all the home services in the general merchandise, and you can quote me on this, should be double. It 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, to 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.

Alicia Reese: I'm wondering if you could also speak to the product mix shift at the original Overstock.com site and how you're honing that, to what extent you're layering products from the other businesses now or steering people to other banners under your other businesses?

Amy A. Sullivan: Hi 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 eye dropper amount of the fashion luxury space that does so well on that site. Bed Bath & 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 & Beyond while still protecting some of the growth that we've sort of acquired over time with that legacy Overstock customer. So I think there's tremendous opportunity to curate each one of them, but really bring it together in the store footprint.

Marcus Lemonis: I want to add a little bit to that. 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, and I don't want anybody to like overreact to this, but even by the end of the year, in addition to selling patio furniture, Rolex watches, Gucci handbags, we will be selling cars and anything else that we believe fits into the four corners of the property and 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 that.

But I think Overstock, when I look at all of our e-commerce businesses, separate from getting normal improvement out of Bed Bath and 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 $0.25 billion. And every day, we're seeing $700,000, $800,000 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 and we start to add billions of revenue, and I want to be clear, Container Store, Bed Bath, Overstock, Lumber, Cabinets To Go, Elfa, Closet Works, all these brands, we're starting to dance in the $2-plus-plus billion range. And when you start to add all of that revenue and all of that gross profit and you extract the costs that come with those, you start to get to profitability within a year or 2 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, and we expect the growth to continue to be low double-digit like it has been over the last 12 months.

Operator: Your next question comes from the line of Jonathan Matuszewski with Jefferies.

Jonathan Matuszewski: My first one, Marcus, was just on 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 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.

Marcus Lemonis: 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 a 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 sign-on.

The second is the home itself. And I liken it to the automobile business when you think about cars. 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 life cycle, including repairs, maintenance, accidents, insurance, everything. We look at the home address the same way. So the single sign-on with the customer tells us about them and the home address tells us about the home.

Over time, with all of these partners, including title, mortgage, credit card 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 square footage, permits, titles, deeds, surveys, mortgages, and you could expect all of that data to live on blockchain. Remember, this company is also heavily invested in tokenization and in blockchain. And we believe 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 has done an unbelievable job of starting to craft the way we communicate with those different assets and giving them the right offer at the right time with the right price and the right tone, hoping that they will capture something there as opposed to this spraying effect where every customer gets every e-mail 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 road maps and believes when we interviewed her that she could really help layer the 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, not Wayfair, not anybody else that will have as many touch points across those 11 years and as many entry points into the life cycle as we have. And we're not done 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 systems and keep them through life.

Jonathan Matuszewski: Really helpful, Marcus. And then just a quick follow-up. As we think about the core business, I think you mentioned some progress on improved repeat spend. So I 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. 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 merchandising and whatnot?

Marcus Lemonis: 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 retail business is our omnichannel business. That's pillar 1. And those other pillars really matter significantly to make sure that we are addressing everything that, that homeowner wants. As it relates to our welcome rewards, our welcome rewards program will be ingested by our Bilt program.

Amy A. Sullivan: So as we think about the Bilt 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 buybuy BABY customer or a Cabinets To Go customer 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 stand-alone 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.

Marcus Lemonis: Jonathan, one thing before you go. It is really important, and it's a big shift because over the last 24 months, all we've been talking about is taking revenue down and getting rid of SKUs 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, in my opinion, wildly undervalued. But based on what was happening, we understood that. As we did these transactions with these other sellers and we asked them to take all stock, 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. And I love reading articles about how ambitious it is or how it's not possible or how it isn't going to work and it really is very simple for me. If you start by understanding data, and how to properly catalog it and how to properly look at it and how to properly communicate with it. 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 Bilt when we did this deal, and Amy and I sat in their offices, I'm only going to do this deal if we can build the model where if they buy a lot of stuff from us as a renter, they can earn enough points to have enough of a down payment to buy their first home. I have been obsessed for the last 12 months about the lack of affordability of buying a home in America. And I don't see any company doing anything about it. Part of what we want to ultimately do is bring low-cost, high value.

And whether that's bringing a credit union to the forefront, where there'll be mortgages, HELOCs, checking and savings or bringing Bilt to the forefront where they'll be able to enjoy rewards at tens of brands, 20s of brands. That ultimately is, I think, what's been missing from the general marketplace. Brands trying to stand on their own, never going to work. Brands trying to stand inside of a simple, flatter ecosystem, we think that's ultimately why this matters. But it really is data center. We want to be known going forward as a data and technology company that happens to cut its teeth in the home space, the largest TAM in America, by the way.

Operator: Your next question comes from the line of Bernie McTernan with Needham.

Bernard McTernan: I was wondering if the better-than-expected results, at least relative to our estimates for 1Q 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?

Marcus Lemonis: We haven't seen gas prices change our demand trajectory, but we are holding steady with the guidepost 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. As we get into Q2, we will have onetime operating expenses that will be directly associated with eliminating redundancies and purging systems and terminating leases and doing all the unpopular things that are required. Brian has committed that we will clearly, in our second quarter, show people what the core revenue is and the core margin is and the core operating expenses are. And we will highlight clearly what expenses.

For example, in the second quarter, we will run through the P&L about $12 million to $13 million of expenses through the Kirkland P&L because we haven't had it in our hands until April 1. But I'm happy with what we're seeing there. I also want to be clear that 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 or 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, had a nice gracious exit, and we will be exiting those locations. We are 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. I believe that if you looked at what we had laid out in the guidepost, Q2 will have about $13 million of onetime expenses. I would expect that Q3 will probably have between TCS around $13 million or $14 million as well.

We don't see as much in the Lumber Liquidators, Cabinets To Go business. Jason Delves, 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, we're requiring a lot of those businesses 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 announced it.

With Kirkland's and TCS, we don't -- we didn't own Kirkland's until April 1, and we don't technically own TCS until July 1-ish, around that date. We're lining it all up, but we will have to purge the system. Nothing daunting or nothing monumental and nothing that we can't handle, but we want everybody to know that there are some onetime things that we will lay out for people.

Bernard McTernan: Understood. 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? Like as you mentioned, there's a bunch of things that need to be done once deals close. So what's the time line that we should expect, yes, to be a positive influence in that Connected Home strategy?

Marcus Lemonis: I think in Q2, as an example, based on when we close and the time of year that it is, we'll see about $80 million of increase coming out of Kirkland's, $75 million to $80 million coming out of Kirkland's. It's a second half of the year business. We're still seeing nice revenue growth on the e-commerce business that low to mid-single-digit growth there. The only thing that you should expect to see in Q2 is about $13 million of onetime 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 what happened 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 6% to 7% revenue growth on a CAGR 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 will be about what you would expect it to be. The TCS business is about $0.5 billion.

The Kirkland's business on an annualized basis is about $350 million, $325 million depending on how many stores we end up keeping. The Lumber Liquidators, Cabinets To Go business is about $500 million. The installation business that we're talking about, the renovation installation business is about $60 million. And so we'll build all of that for you as we build this live together. But they'll fold in, in cadence. And I would expect that by 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 1, 2 or 3 based on what Amy wanted, Brian wanted or Jason wanted.

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

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

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