Bed Bath & Beyond Inc. (NASDAQ:BBBY) Q2 2017 Earnings Conference Call - Final Transcript

Sep 19, 2017 • 05:00 pm ET

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Bed Bath & Beyond Inc. (NASDAQ:BBBY) Q2 2017 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

Thank you. We'll now begin the question-and-answer session. [Operator Instructions] And our first question comes from Peter Benedict from Robert Baird. Please go ahead.

Analyst
Peter Benedict

How are you guys? Thanks. I just want to ask about the gross margin enhancement initiatives. I mean, I'm just trying to get a sense for where you guys think gross margin starts to stabilize? I mean, the direct-to-consumer shipping headwinds probably are going to persist here given the strength you're seeing in that business. So where is the opportunity really going to come from? Is it around the merchandise margin? Is it around the couponing? Help us understand how you're seeing that over the next year or two? Thank you.

Executive
Steven H. Temares

Hi, Peter. The gross margin enhancement, it has several components surrounding initiatives that we can use to enable us to increase our efficiencies in importing products and a lot of the components of vendor relations as far as how to most efficiently move the product through our supply chain and including sourcing costs.

Analyst
Peter Benedict

And is there any thought around the couponing program just in aggregate, I mean, the role that that should play? Does that still make sense to have, any ideas or thoughts around maybe changing that, just curios your thoughts there?

Executive
Steven H. Temares

Hey, Peter, it's Steve. So, listen, it's an important component of our value proposition for many of our customers. So it's something that as we improve our marketing and our personalization generally, it affords us the opportunity to play with how much couponing we do and who receives it at what point in time as is BEYOND+. But again at this point, it is a strong driver for us in Bed Bath. Obviously, Cost Plus has its own loyalty program, some of entities, concepts don't have couponing. But at Bed Bath, it is and it remains important.

And as to your question about the direction of our margins generally is that, again there's a mix issue here even as we get better and our gross margin enhancement initiative will allow us to do that, there is a mix of merchandise that we sell that -- the type of merchandise we sell and where we sell it.

So whether we're selling it in-stores, we're selling our own merchandise online, or we're selling merchandise directly that's being shipped from vendor, vendor direct, they have different implications from a margin structure in terms of markdowns and other elements that are unique to each way we sell it, as well as whether you're selling more hardlines, more softlines, more private label.

So all those are ingredients in the margin, so it's a -- so it's -- there are many moving parts to it. So, we would like to tell you that it's going to plateau at a certain point. But looking at it the rest of this year, we've given you the guidance that we can for the remainder of this year. And so that's not the expectation from here for the rest of the year.

Operator
Operator

And