Bed Bath & Beyond Inc. (NASDAQ:BBBY) Q2 2019 Earnings Conference Call - Final Transcript

Welcome to the Bed Bath & Beyond's Second Quarter Fiscal 2019 Earnings Call. [Operator Instructions]

A rebroadcast of the conference call will be available beginning on Wednesday, October 2, 20 19, at 8:00 PM Eastern Time through 8 PM Eastern Time on Friday, October 4, 2019. To access the rebroadcast, you may dial 888-843-7419 with the passcode ID of 49010664.

At this time, I'd like to turn the conference call over to Janet Barth, Vice President, Investor Relations. Please go ahead.

Thank you, Adrian, and good afternoon, everyone. Before we begin, I want to remind you that our fiscal 2019 second quarter earnings release and slide presentation can be found in the Investor Relations section of our website at www.bedbathandbeyond.com, and as exhibits to the Form 8-K we filed just ahead of this call.

Joining me on our call today are Mary Winston, Bed Bath & Beyond's Interim Chief Executive Officer and Member of the Board of Directors; and Robyn D'Elia, our Chief Financial Officer and Treasurer.

Let me remind you that this conference call and the slides we refer to may contain forward-looking statements, including statements about or references to our outlook regarding the Company's performance, our internal models and our long-term objectives. All such statements are subject to risks and uncertainties that could cause actual results to differ materially from what we say during the call today.

Please refer to our most recent periodic SEC filings for more detail on these risks and uncertainties, including the Risk Factors section in our Annual Report on Form 10-K. The Company undertakes no obligation to update or revise any forward-looking statements.

Additionally, the information we will discuss today contains certain financial measures that exclude amounts or are subject to adjustments that have the effect of excluding amounts that are included in the most directly comparable measure prepared in accordance with generally accepted financial measures. For a reconciliation to the most comparable measures presented in accordance with GAAP, please refer to the table at the end of our earnings release available on our website and included as an exhibit to our Form 8-K filed today.

Some highlights from the second quarter include adjusted net earnings per diluted share of $0.34, excluding $1.46, which consists of severance costs and an inventory write-down, which are related to the first wave of transformational initiatives as well as non-cash store impairment charges; a 20-basis point improvement in adjusted gross margin, reflecting benefits of several ongoing margin enhancement initiatives; a $47 million year-over-year reduction in adjusted SG&A expense reflecting some early benefits from our cost structure optimization efforts, including lower payroll and occupancy expenses; a cash and investment balance of approximately $1 billion; and a decline in retail inventories of approximately $492 million or approximately 18% at cost compared to the end of the prior-year period, including a transformation-related inventory write-down of approximately $194 million during the fiscal 2019 second quarter.

In addition, today, the Board declared a quarterly dividend of $0.17 per share that will be payable