Bed Bath & Beyond (BBBY) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was $398.1 million, down 5.7% year-over-year, with sequential revenue up 4% and a 25% sequential improvement in adjusted EBITDA, driven by higher gross margin and reduced fixed costs.

• Active customer base grew 34.6% to 6.2 million, with orders delivered up 8% year-over-year to 1.9 million, but order frequency dropped to 1.39 and average order value declined 12.8% to $204.

• Focused on profitability, asset-light operations, and brand relaunches for Bed Bath & Beyond, Overstock, and Zulily, with new partnerships and expansion into liquidation and closeout business.

• Net loss for the quarter was $42.6 million, improved from $73.5 million in Q2 2023, with adjusted diluted net loss per share at $0.76.

• Cash and cash equivalents stood at $186 million at quarter end, down $70.1 million sequentially.

Financial highlights

• Gross margin was 20.1%, down 530 bps year-over-year but up 70 bps sequentially, with gross profit at $80.2 million.

• Adjusted EBITDA loss was $36.4 million, a 25% sequential improvement, and adjusted EBITDA margin was -9.1%.

• GAAP EPS loss was $0.93; adjusted diluted loss per share was $0.76.

• G&A and tech expenses were $46 million, down $3.5 million year-over-year, representing 11.5% of revenue.

• Free cash flow for the first half of 2024 was ($118) million.

Outlook and guidance

• Q3 revenue is expected to follow the historical trend of being 12%-14% lower than Q2, but the goal is to outperform this.

• Management expects continued financial improvement through cost reductions, operating system calibration, and brand monetization, with profitability targeted for 2025.

• Zulily launch targeted for September 10, expected to contribute more in Q4.

• Liquidity and capital resources are expected to be sufficient for at least the next twelve months.