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Hello, everyone. Thank you for joining us, and welcome to the Q1 2026 Bed Bath & Beyond, Inc. Earnings Conference Call. [Operator Instructions] 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 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.

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.

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.

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.

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

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?

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.

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?

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.

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

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?

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.

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.

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.

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.

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

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?

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.

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?

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.

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-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.

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

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.

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.

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?

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.

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 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.

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.

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

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?

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.

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?

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.

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

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.

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

Hello, everyone. Thank you for joining us, and welcome to the Q4 2025 Bed Bath & Beyond, Inc. Earnings Conference Call. [Operator Instructions] I will now hand the call over to Melissa Smith, General Counsel and Corporate Secretary. Please go ahead.

Thank you, operator. Good afternoon, and welcome to Bed Bath & Beyond, Inc.'s Fourth Quarter and Full Year 2025 Earnings Conference Call. Joining me today on the call are Executive Chairman and Chief Executive Officer, Marcus Lemonis; and President and Chief Financial Officer, Adrianne Lee. Today's discussion and our responses to your questions reflect management's views as of today, February 23, 2026, and may include forward-looking statements, including, without limitation, statements relating to our future business strategy, goals, financial performance, outlook for the remainder of the quarter or for 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 Brand House Collective, blockchain efforts and strategies, 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, 2024, and in our Form 10-Q for the quarter ended September 30, 2025, 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 fourth quarter and full year earnings release, which is available on our Investor Relations website at investors.beyond.com contain 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, let me turn the call over to you, Marcus.

Thanks, Melissa. I'm here with Adrianne as well. I'm sure that some of you are in New York City. For the first time we're experiencing more snow than we have in Salt Lake. So happy skiing to everybody out there. Good afternoon, everyone, and thanks for joining us. 2025 was about stabilizing and building the base of this business. 2026 is about growing that base and expanding it within the framework of our 3-pillar ecosystem architecture. That framework that we announced on January 5 remains unchanged. Over the last 8 quarters, we have delivered consistent year-over-year EBITDA improvement while materially lowering the breakeven level of the company. That discipline continued in the fourth quarter. Revenue declined year-over-year, largely reflecting housing market softness and our deliberate decision to eliminate vendors and SKUs that generated negative contribution margin. We chose margin integrity over headline revenue. That was intentional, and it's also in our past. Importantly, the year-over-year revenue gap narrowed meaningfully in the fourth quarter, while adjusted EBITDA loss improved by more than $23 million or 84% on lower revenue. We also delivered meaningful gross profit margin improvement in 2025 compared to 2024 despite tariff headwinds and an unpredictable sourcing environment. That improvement reflects better vendor negotiations, improved product mix, tighter inventory controls and a more efficient operating structure. Our margin performance is increasingly structural, not cyclical In 2026, our objective is to advance and progress our margins towards 25%, the midpoint of our 24% to 26% framework. Over time, as omnichannel scales increases and ecosystem synergies compound, we believe we can break through 26% and ultimately reset the original range higher. That progression is going to take time. We will not compromise top line growth or customer value simply to form for short-term margin expansion. We believe the true base of the business has now been established in 2025. We are seeing low to mid-single-digit year-over-year increases in revenue growth early in the year and are targeting low- to mid-single-digit revenue growth for the full year 2026 based on current trends. While we're not providing formal guidance, it is important because the company is in an active building phase, growing its base business while layering in complementary acquisitions across each of the 3 pillars, we believe it is important to provide directional clarity, so investors understand how performance should progress quarter-by-quarter and across the full year. This is a build. It is sequenced and it is deliberate, much like the last 8 quarters. We expect continued year-over-year improvement, but that improvement will not be linear. It will follow integration timing and execution milestones. In the first quarter, we expect year-over-year revenue growth and EBITDA improvement of at least 30% compared to Q1 of last year. This reflects stabilization of the base business and continued cost discipline. In quarter 2, we expect to close on the Kirkland's transaction on or around April 1. Q2 will reflect partial ownership and will include transition and integration activity. It will not reflect the full benefit of merger synergies. We expect approximately 90 to 120 days following the closing to execute meaningful integration initiatives, including consolidation of overlapping corporate costs, vendor contract alignment and purchasing leverage, shared services optimization, supply chain integration, technology integration and merchandising alignment. There will be transaction costs and transition costs associated with the merger and integration. Q2 should be viewed as an integration quarter, not a fully synergized quarter. But the base business will have increased revenue and will have improvement on the bottom line as it relates to EBITDA. Quarter 3 integration work should be executed, and Q2 should begin to flow through the financials in a more meaningful way. We expect positive top line growth and improved operating leverage with a stretch objective to approach breakeven. By Q4, assuming integration milestones are achieved, we expect positive top line growth again and improve margin leverage with an opportunity in Q4 for profitability. This framework reflects disciplined execution, not reliance on a housing recovery. Everything we are building fits into one of three defined pillars. I outlined them on my January 5 letter and again today on my February 23 shareholder letter. Nothing sits outside the framework that I've provided. The architecture is the filter through which we evaluate every deal, every acquisition and every decision. We are aggregators, not consolidators. A consolidator requires similar businesses to reduce costs and drive margin through scale. An aggregator, which we are builds a connected system of complementary capabilities that strengthen one another. Later on, you'll be able to check our investor site to see the graphic that we've posted, one sheet graphic that will show you what that ecosystem looks like. We are building integration, not accumulation. The other one is pretty simple. It's our omnichannel business. It includes brands like Bed Bath & Beyond, Overstock, buybuy BABY and Kirkland's upon closing. Including Kirkland's, this pillar approximates $1.5 billion in annualized revenue with an additional omnichannel transaction agreed to in principle with the sellers expected to add an additional $500 million in top line. Look, retail drives engagement, purchasing leverage and customer acquisition. Pillar 2 is our protection advocacy, brokerage and financial solutions pillar. It includes property and casualty insurance, renters insurance, home warranties, product warranties, title services, renovations and renovation financing, mortgages and HELOCs, a credit union partnership and a scaled residential brokerage network. The brokerage platform is critical. We are pursuing the acquisition or development of a scaled residential brokerage network as we speak, of thousands and ultimately, tens of thousands of agents. Protection and advocacy come first. When trust is established, customers give us permission to extend those services. Financial services is an extension of trust, not the starting point. Pillar 3 is our home services installation and maintenance infrastructure. It includes flooring, cabinetry, closets and storage systems, carpeting, renovation services, professional installation, repair and maintenance networks. The differentiator is the installation labor model. Most homeowners cannot self-install flooring, cabinetry or renovation materials, installation is required. By building a professional labor network, we create higher transaction values, stronger attachment rates, greater customer stickiness and ongoing maintenance engagement. This infrastructure converts retail demand into completed projects and allows brokerage origination to flow into renovation activity. For all of this to work, you got to make sure that everything has a unifying layer. Surrounding all 3 pillars is our proprietary loyalty and identity wrapper executed in partnership with BILT. We're also building a broader home operating system. The home operating system connects the homeowner in the home through durable digital records around protection, financing, renovation history, installation records, warranties, public records, surveys, titles, deeds and maintenance events. LifeChain supports this infrastructure by creating durable records around both the homeowner and the home itself on blockchain. Without this layer, these are separate businesses. With it, they become an integrated ecosystem. A key priority in 2026 is accelerated implementation of modern technology across the enterprise. Yes, that includes AI. We are deploying tools that increase conversion, improve inventory productivity, optimize pricing, enhanced marketing efficiency and reduce operating costs. Technology is performance lever designed to drive revenue up and cost down simultaneously. At this point, I'll turn the call over to Adrianne to walk through our fourth quarter and full year financial results in greater detail. Adrianne?

Thank you, Marcus, for your insight into the significant financial progress we made in 2025 and our strategic path forward, as you mentioned, outlined in your shareholder letters. I will now turn to our fourth quarter financial results, which highlight the achievement of consistent earnings improvement throughout 2025 and the material progress towards our committed targets to restore our retail operating discipline. Revenue declined 10% year-over-year in the fourth quarter and 6% if you exclude the impact of discontinuing our operations in Canada. AOV improved 7%, driven by our continued focus on improving assortment on the Bed Bath site and an increased sales mix into Overstock. This was partially offset by less orders delivered in the quarter versus 2024. However, I am pleased orders delivered increased 13% in the fourth quarter versus third quarter of 2025. Gross margin landed at 24.6% for the quarter, a 160 basis point improvement compared to the same period last year. For the full year, we improved gross margin by 390 basis points to 24.7%, driven by structural changes in freight contracts and returns economics as well continued pricing and discounting rigor. We expected quarterly gross margin to be in the 24% to 26% range, impacted by seasonality, emerging categories and competitive landscape and delivered just that. Sales and marketing decreased by $15 million or improved efficiency by 350 basis points as a percent of revenue versus last year. It's important to note, our full year spend efficiency improved by close to 350 basis points, another meaningful improvement to earnings power. We continue to navigate the balance of driving revenue and maintaining our ROAS guardrails while improving the site experience and sharpening pricing. We maintained our internal guardrails, launch retention tools, improved own channel and now need to optimize these tools and learnings for growth. G&A and tech expense of $33 million decreased by $15 million year-over-year as a result of our commitment to reduce fixed costs through rightsizing the organization, prioritizing efforts and mandating productivity. I am pleased that we exceeded our commitment to achieve a $150 million annual run rate. All in, adjusted EBITDA came in at a loss of $4 million, an 84% or $23 million improvement versus the fourth quarter of 2024. Full year adjusted EBITDA was a loss of $31 million, a $113 million improvement versus 2024. Reported diluted EPS was a loss of $0.30 per share, an 82% or $1.36 improvement year-over-year. Notably, full year net loss improved by $174 million and reported diluted EPS improved by 75% or $4.15. We ended the quarter with cash and cash equivalents, restricted cash and inventory balance of $207 million. Full year cash used in operating activities improved year-over-year by more than $118 million or 67%, illustrating significant progress against the transformation initiatives and stabilization of the retail operations. 2025's performance reflects significant measurable and importantly swift progress in retaining our core retail operating discipline, and materially reducing the expense to run the business. This is evidenced by the $113 million or 79% improvement in adjusted EBITDA year-over-year. As always, we will remain focused on continuous improvement, finding efficient ways to create a more variable cost structure with an intense focus on driving top line growth. With that, I would like to turn the call back to Marcus.

Let me close with one broader perspective. Thanks, Adrianne. Our current plan does not assume a housing recovery. However, as mortgage rates moderate and transaction volumes return towards historical mid-cycle levels, the ecosystem we are assembling is positioned to benefit from that normalization. When incremental demand is layered on top of a fully integrated platform with merger synergies realized in structural costs aligned, we believe the company has potential over time to generate substantial mid-single-digit to high single-digit EBITDA margins. That expectation reflects disciplined execution and a normal housing environment, not aggressive assumptions. 2025 stabilize the base. 2026 is about expanding the base with a disciplined architectural framework. We are aggregating complementary capabilities. We are integrating talent and expertise. We are building execution and infrastructure. We are connecting the homeowner in the home. We are very deliberate, and we are very confident in our sequencing. I'd like to now turn the call over for questions.

[Operator Instructions] Your first question comes from the line of Steven Forbes at Guggenheim Securities, LLC.

Marcus, you mentioned a few 2026 growth drivers within the release in prepared remarks, right, AOV being one of them, conversion being another. But as we look at some of the core KPIs that you report, I was curious if you can maybe just walk us through how you're thinking about the active customer base? Like are we reaching a troughing point? Is there visibility within the cohorts to rescale that in 2026? And then also orders per active customer second quarter in a row of stability? Is that indicative of sort of that KPI also bottoming?

Thanks for that question. We don't believe that -- we believe, excuse me, we believe that the trough is behind us. And that everything you see going forward will have growth, growth in revenue, growth in EBITDA performance, growth in the number of active customers. What I want to be careful of is to land on AOV because as Bed Bath & Beyond starts to open up stores again, we believe that there's going to be a disproportionate amount of volume based on the last 12 to 24 months that will lean into some of the historical Bed Bath & Beyond categories. And while we don't expect furniture, patio and rugs to do anything but grow, when you start mixing in higher count items in your basket versus dollars in your basket, it could throw that off a little bit. And as we start stocking a lot of inventory, in our potential Jackson, Tennessee warehouse through the Kirkland's acquisition, we're going to see more towels, more small appliances, more gadgets, more top of bed, more housewares go through our ecosystem online, ultimately driving that AOV down but driving the average customer base up. We will come up with a clean way to delineate historical categories and their performance and legacy Bed Bath categories and their performance because as a reminder, a lot of our online business today is a function of what Overstock did for years. So yes, growth in all cases, I want to be tempered on the AOV just because of the change in mix that could happen through the year.

And then a follow-up. As we think through the opportunity you expressed via Pillar 2 and Pillar 3, I was curious if you could maybe explore your ability, if you have measured, I guess, interest among your active customer base or intent of utilization of such services, if the demographic profile sort of caters to those -- that services, I guess what gives you conviction and what should give us conviction that the opportunity is addressable to Bed Bath & Beyond?

Well, I think you have to start to think about Bed Bath & Beyond differently and stop thinking about Bed Bath & Beyond is the old Overstock e-commerce business and start to think about the overall housing market. And when I look at the size of the TAM in the trillions, not billions in the overall housing market, we believe that an ecosystem that taps into all the parts and pieces of that is quintessential to our business. The omnichannel business is really the first place we meet the customer. And when you look at Bed Bath & Beyond, Overstock, buybuy BABY, Kirkland, and the pending acquisition that has yet to be announced, we will have rounded out all of the important, what I would call, categories of soft and hard goods inside the home. When I go to the other side of the paper, which is Pillar 3, the home services, we know that for decades, these things have existed independently and whether that's flooring, closets, cabinetry, carpentry, installation services, renovation services, we know those things are going to exist, regardless of what's happening in the general economy. And we believe that the connection between those two is that they're both originators of new customers. What I like about Pillar 3 is its ability to spark larger transactions that call for things like financing or warranties. If I'm putting in all new cabinetry in my kitchen, that could be a $7,500 to $8,000 order. That's going to largely come with financing and maybe some other services along the way. It also gives us the ability to get into the home with a homeowner and build the relationship, putting in new flooring, putting in new carpeting, putting in new closet systems. Don't just apply to a first-time homebuyer. They apply to renovations. They apply to expanding families. They apply to life-changing events. And what we're doing is we're taking the proprietary knowledge we have of why customers shop at Bed Bath and more importantly, when they shop at Bed Bath, and we want to exploit all of those life events by selling them more than towels. The middle section is probably the easiest to understand because we know it's a competitive landscape as it relates to mortgages and HELOCs and insurance and warranties. As a reminder, insurance and warranties are regulated. So it's not easy for people to discount those services. That comes from trust. When it comes to banking and things like banking, whether it's savings, checking, mortgages or HELOCs, we're going to take two avenues. The first avenue is we are launching a partnership to launch what we believe to be the first ever homeowners credit union in America. It's a unique proposition, and it will offer 3 products, market-leading savings rates, market-leading checking rates and what we believe is market-leading mortgages and HELOCs, that's a more traditional buyer. When they see credit union, they know there's value there because the layer of making money between the cost of funds and the retail rate that the banks have to make a profit, credit unions do not have. We want to show our customers that value is squarely there. We signed a new deal with Brown & Brown to launch both a property and casualty insurance agency, a choice model that puts multiple carriers in front of people as well as a full relationship on home warranties and product warranties. Product warranties and shipping insurance are through Extend. The only reason why I'm 100% confident that this ecosystem works is that I did it in my former life, by understanding where origination starts and where all the other tentacles for lifetime value expansion exist. Candidly, what's missing in that middle stack and may be lost on people is brokerage services. As I mentioned in my prepared remarks and in my letter, we are pursuing three large transformative pillar acquisitions. One in Pillar 1, which I disclosed, is a deal in principle that's agreed to for Pillar 1. Pillar 3 is a deal in principle that's been agreed to on the home services side. And in the middle pillar is a deal that's in process, pretty close to being agreed to that I think will give that business the teeth of origination that it ultimately leads. If those 3 acquisitions pan out the way we expect them to, it would be north of $1.5 billion of additional revenue on top of the existing base that I described, that also includes Kirkland's. So you take the 1.5 -- approximately $1.5 billion base of our original e-commerce business, you add the omnichannel business of Kirkland's to it, and then you add these 3 transactions, and you could end up with an annualized run rate of about $3 billion, but one in each of those pillars really providing the foundation for how those businesses will be built.

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

Marcus, I had a follow-up question first on just Pillars 2 and 3. And just trying to get a better hold of maybe the trajectory for how you see those 2 mixing into the overall kind of revenue base? And would it be correct to assume that the margin profile of those Pillars 2 and 3 is going to be kind of the overall driving factor of EBITDA margin expansion over the medium term. Is that kind of the next leg in terms of margin expansion? That would be my first question.

Yes. We've talked for a while now about the margin range of 24% to 26%, and that's been on the historical e-commerce business, and we know the retail business is slightly better than that, 2 or 3 points better than that in a normal environment. What we know for certain is that the home services, the cabinets, the flooring, the closets, the installation, the renovation, they all come with far greater margins than that in excess of 40%. And part of our strategy in growing our overall profitability is expanding our overall company consolidated margin through, a, the acquisition of those types of businesses in Pillar 3 and being able to absorb those. We will have work to do to take out some of the merger synergies and lower their CAC so that their EBITDA coincides with our expectations. But from a gross margin standpoint, materially higher than selling towels and couches online. The middle section is probably the one that I'm most excited about. And it takes several years for it to come to fruition. But the acquisition that we have on the table will build the solid, call it, $400 million foundational base of which we'll build stuff on top of. In that particular instance, whether it's the credit unions, the insurance, the warranties, keep in mind that the cost of goods associated with all of those is de minimis. There is no real asset. In many cases, because we are never taking on the liability. We're not acting as a bank. We're not acting as an insurance company. We're not acting as a warranty insurer. We are a marketing and sales organization, making commissions and fees off of those, the margins are explosive, north of 50%. And so over time, as we start to see those mature, we would expect the consolidated margin in the next 36 months pending these acquisitions coming together to expand above and beyond 30% for the overall ecosystem. The key is making sure that we take the costs out of these businesses. And one important distinction that I'm sure many of you are thinking, and I want to address upfront is we are going to operate these pillars individually with their own leaders and their own, call it, CEOs sort of presidents of those businesses. These are people that are foundationally subject matter experts in those disciplines, not taking those businesses and trying to have e-commerce people run them. We believe in having independent for entrepreneurs to be able to operate as subject matter experts. And where consolidation will exist is twofold. One, from a financial and treasury standpoint, wanting to make sure that we're taking out any redundant back-office costs and from a data consolidation standpoint, meaning that each of these businesses are obligated to remit their financials, sign up for our code of conduct and the way we want to do business and contribute data in a form and a manner to the overall ecosystem that matters. We feed that data into a data fabric, which is being operated by a third party. And we partner with a master wrapper loyalty program, functioned and partnered with BILT, B-I-L-T. You can do your research and find out what they do today. We, as you could tell as a company, believe in partnering and buying as opposed to building everything because technology moves so fast. So the operators are really in their own little cocoon and we are acting as aggregators. But the most important aggregation and where we think we're going to get the real cost synergies lowering the CAC for each of them, finding administrative costs that can be eliminated and sharing in treasury management efficiency. And that's ultimately why we are so confident that this business in short order, 3 years can be in a normal mid-cycle environment, could be mid-single digit to high single-digit EBITDA contribution because of those factors.

Very helpful. And then CAC is a nice segue just for a follow-up. Would love to just hear how you're thinking about measuring the success of your ads pilot with instant Checkout and maybe the types of customer activation or the volume of activation that you'd maybe need to see to divert more advertising dollars to that experimental channel?

We're talking -- you're talking about chat?

Yes.

Yes. It's too early. I mean it's been a couple of weeks and we were one of the pilot programs with them in getting launched, but it's really early in the innings. There's a lot of learnings that have to happen. But one thing that we have noticed in the last several months is that layering in different learning machines and different technologies is allowing us to get better, but let me be really clear. We are nowhere, nowhere near where we need to be in the next 12 to 24 months. And we've started to engage with outside third parties to help us assess our tech infrastructure, look at our overhead, look at the connectivity between everything and look at integrations, we recently engaged with Alvarez and they'll be doing a full study for us particularly in light of all of these acquisitions to make sure that we're squeezing out every last dollar and capturing every last bit of information.

Your next question comes from Bernie McTernan at Needham.

Great. Just had a follow-up on Pillar 2 to make sure I understood the right thing. So the large acquisition happening in Pillar 2 for origination. So should we assume then that all those -- whether it's insurance, home warranty, HELOCs, all that will be after the acquisition, you'll be able to offer all of that on a 1P basis and then partnering with big residential brokerage to basically sell those services?

So the way I'd like you to think about it is there's kind of like a 2-funnel approach. Funnel number one is using all of the customer engagement from Pillar 1 and Pillar 3 to offer all of those services in Pillar 2. And that's a little bit harder hill to climb quickly. You can get there over time after you build trust, after you improve your customer service experience, after people understand the connectivity. The acquisition in Pillar 2 around the brokerage services provides instant, I would call it, integration. And I would expect on day 2 of that acquisition that the products and services that we have lined up whether it be with the credit union, whether it be with the insurance companies, whether it be with the warranty companies, whether it be with the titling companies would immediately be embedded. The piece we like most about this potential acquisition in Pillar 2 is that it has already started some of those services and have seen early success but doesn't necessarily, in our opinion, have the technology or the capital to invest in technology that can supercharge that. When you think about that real estate brokerage network, what you're really talking about is thousands, if not tens of thousands of sales agents who are commission based. That's how they sell things. We believe that there is an interesting and proper way to motivate those agents to receive commissions not only from the things they're permitted to inside of their real estate license but also to be able to sell other products and services in the ecosystem for commissions that are compliant with whatever the state regulation is. When you can pick up a 10,000-person army of salespeople who are commission-based who are hungry to provide value to customers only on things they need, you get instant activation. I would expect that within 12 months of making that acquisition, we would be running at relatively full steam looking for attachment in a more traditional manner.

Okay. Understood. That's really helpful. And then just a quick follow-up. The -- I know we're not calling it guidance, but directional commentary on '26 for low to mid-single-digit revenue growth. Is that inclusive or exclusive of Kirkland?

So let me take my time here and go very clear. In the mid-single revenue growth numbers that we're talking about, that is omnichannel -- excuse me, that is e-commerce only. Low to mid-single digits is e-commerce only. Kirkland's will have similar growth at the same time. And so when we closed on that acquisition for Q2, we're going to provide you a forecast. But what you can expect out of our base business for 2026 is low to mid-single, hopefully closer to mid-single-digit growth for the full year. Margin expectation for that base business, we were 24.7% in '24 -- excuse me, in 2025. We want to get to 25%, which is the midpoint, and that's a push, particularly with all the noise around tariffs. And the more recent noise as in like Saturday, we want to get ourselves to 25%. On the sales and marketing expense, we're probably going to look maybe flat to similar in 2026 versus 2025, I'm hedging myself a little bit there because I think we have some unlocks that haven't fully been realized. And we expect nice improvement in EBITDA every single quarter over its previous year with the outside [ shot ], stretch, stretch, stretch goal in Q3 of profitability, a little less of a stretch in Q4 for profitability of 2026. That does not include any of the larger acquisitions we're talking about, but I promise you this. The shareholder letter and the amount of disclosures that we've provided, they will continue to be as robust as we're providing them now. So that when we do make an acquisition, you will understand how 1 plus 1 equals 2. There will be no hiding the weenie, you'll understand it full throttle. What we have to tell you, though, in order to make the numbers work long term, it takes from the moment we get the keys because we can't influence change before we close. But from the moment we get the keys, in some cases, 90 to 120 days, in other cases, when you're getting out of leases or getting out of distribution centers or consolidating contracts, it could take anywhere from 8 to 12 months. We will show you that when we lay it out. We'll show you what it looks like. We'll show you what we think the pro forma could look like, and we'll show you maybe like a 2-, 3-year cadence of what that could look like as well. I will tell you, I'm really excited by what we're seeing in the early forecast. And again, none of this contemplates a housing recovery. The housing recovery happens, then we're going to be in much better shape.

Your next question comes from Thomas Forte with Maxim Group.

Congrats on the improvement in the quarter and the year. Regarding the everything home ecosystem and pillars, the first question, and I'll wait for the answer and then one follow-up. So Marcus, when I look at each pillar, how do you determine when to work with a strategic partner versus when to own and operate an asset? On the surface, it seems like Pillar 1 is all owned and Pillars 2 and 3 are more partnerships or combinations of owned and partnerships?

Pillar 1 is largely owned, but we are working on some larger licensing transactions with both the existing brands we have and some of the brands that we're acquiring. Secondly, we already have the relationship in Canada where we licensed and sold the intellectual property in Canada. We expect them to start opening stores, and they'll be contributory. But for the most part, Tom, you're right. The bulk of it is owned. In Pillar 2, the delineation between when we should be in it and when we shouldn't be in it, is when there's a lot of regulatory complexity to it and a lot of what I would call balance sheet risk. We are not in a position and probably won't be in the near future to take on any balance sheet risk around claims, or around reserves or around insurance or around financing or any of those things. We just don't believe that we are subject matter experts in that result. We are an origination machine, and we expect to make money through all of these different transactions, including the brokerage services in all of those. I would never expect us in the short term to be anything more than an insurance agency, a seller of warranties, a provider of financing. What we like about that is that there's no inventory requirement, there's no capital requirement. There's no reserve requirement and the money flows pretty nicely. But there also isn't a big staff required to execute those. And so while some have said to me, "Oh, you're giving up margin by not being the bank or not being the insurance company." There is truth in that, but what they forget is all of the costs associated with doing that and the regulatory complexity with doing that, that is not where we want to spend our time nor our money. In pillar 3, we want to own as much of that as we can, including providing the home services, installation services and all the products that go with it. We believe that, that is a gateway to meeting the homeowner where they need us most. The margins are explosive and the opportunity to surprise and delight and upsell is easier if we're controlling the journey than a third party is controlling the journey.

Great. And then for my follow-up, can you walk us through, recognize it's still early, your vision for the home operating system in the home OS? I know you've talked about it a couple of times.

I like in the home operating system similar to how I like in loyalty. It's a wrapper around the entire ecosystem. And many people know home operating systems because they have Alexa or they have a ring doorbell. But at the end of the day, society and homeowners and renters are moving towards a connected home. And while it's nice to connect your lights and your AC and your TV and your radio and all those things, that isn't what we believe is the most important part of the operating system. The most important feature of the operating system, in our opinion, is a real estate ledger, a blockchain ledger that captures all of the important documents for 2 different sets of items. One, the homeowner themselves and all the things that make up everything that they do and the home asset itself, including titled [ Deed ], survey, insurance, maintenance records because we know that the homeowner is portable. They're going to move in and out, and that home stays relatively constant. We like it on blockchain because we think it over time, provides integrity for insurance providers, lenders, home buyers, maintenance providers, warranty providers to see the true health report and the true lineage of that asset giving people an opportunity. No different than if you drive a car and you don't have an accident over time, you get better rates. People have to know what the health is. We think blockchain is a great way to do that. If you look at that particular product being existent back when the Palisades fire happened, and all those folks had no records of anything that happened, we want to solve problems like that, both because people are transient, both because people buy and sell houses every 7 years. And because there's these catastrophic events that caused that to be necessary. You would access that information both through an app and through a touchscreen in your home. As a feature, as a benefit, as a nice to have in addition to the important center of the universe with LifeChain. Of course, you'll be able to handle your lights and handle your alarm and handle your doorbell and your AC and all those other things that we're all used to. But that should be features and benefits, not the core deliverable. We expect to be developing a good chunk of that over the next 12 months and hope to launch something like that in partnership in 2027.

Your final question comes from Seth Sigman from Barclays.

Can you guys hear me? I wanted to go back to your comment about low- to mid-single-digit revenue growth early this year. Is that meant to say what you're running right now? And if so, can you just bridge us versus, I think it was down 6% in the fourth quarter year-over-year. What is driving the top line improvement maybe across categories, perhaps consumer cohorts. What are you seeing? Because obviously, that would be a pretty meaningful improvement.

Yes. So a couple of things. We have seen positive year-over-year growth starting in January through today. It's low to mid-single digit. It is our goal over the course of the year to push ourselves towards mid-single digit and hopefully even bust through that. Here's what's ultimately changed. We have really done a nice job of cleaning up the assortment online. We've done a nice job, plenty of work to do left on improving the pricing. We've got better at marketing and getting people in our ecosystem to come back for the second and third purchase. We're being very diligent about the kind of marketing dollars that we're spending, spending a little bit more on new technology including a new pilot with chat, new techniques around SMS and we believe that the omnichannel launch will help just create general awareness. We are not pleased, and I know this is going to sound funny, we are not pleased with low to mid-single-digit growth. We want to be conservative. And we want to outperform that in the market, but we also want to build our cash flow and our projections around something we know we can hit. And if you go back and you look at the last 4, 5 quarters, we've been pretty good at saying we're going to do something and delivering it. And I think that's the key to this business. We know we need to earn that trust and earn that confidence. And the only way to do that is set realistic expectations, meet them or exceed them. But so much of itself came from cleansing things, getting rid of vendors with bad margins, getting rid of SKUs with bad margin, getting rid of products on the website that have no relevance to our site, cleaning up how we're presenting brands. Figuring out how we're ultimately going to get the customer back for their second purchase that may have come through on a PLA ad. We can't keep just buying the customer. We have to earn, win and maintain that customer. And that's what we're starting to see happen. When we look at Q1, just to give clarity around it, we are expecting call it, 3% to 5% in revenue improvement in Q1, and we are stretching for about a 30% improvement in EBITDA margin year-over-year from Q1 of last year, we're expecting margins to be -- where they're trending now is where we think they're going to end. They're around 24.5% to 24.7%. That starts to get a little bit of pressure as we start indexing into patio. When we get into Q2, we would expect to see that same 3% to 5% growth. We think there'll be a little bit of pressure on margins because more into patio, probably pushing closer to like 24.1%, 24.2%, but we expect EBITDA improvement again in Q2. And then when we get into Q3 and Q4 is when we think we're going to start to see a little bit more wind in our sales, where we expect that revenue to maybe be 5%, 5.5%, hopefully, forcing it to 6%, getting the margins to stabilize around 25% in Q3 and Q4. And having taken more costs out, which is what's giving us confidence to have a stretch, stretch, stretch goal to make some money in Q3. We know we'll be better in Q3. We don't know if we can get all the way to 0. And then in Q4, as we just reported, I think, a $4.4 million EBITDA loss, getting to 0 or above. And we know we have time and we know we have work to do, but that is something that's really exciting in our company that we're doing it the right way. We're building -- we're growing. We're adding customers. We're generating revenue. We're making acquisitions. We are no longer in holy c*** of places burning down, and we need to cut stuff. We're now in the kind of mode that caused me to leave my old company for this full time.

There are no further questions at this time. I would love to turn the call back to Marcus Lemonis, Executive Chairman and Chief Executive Officer, for closing remarks.

Great. Thank you so much. We look forward to seeing you on our next quarter call. Take care. Bye-bye.

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