Bed Bath & Beyond, Inc. (BBBY) Earnings Call Transcript & Summary

Okay. Good afternoon. We're going to get started here. This is going to be a relatively short call, but we are using this as an opportunity to continue to overcommunicate the different initiatives that are happening at Beyond. As a matter of clarity, the information that we're providing here today falls under the same rules as any safe harbor act, and we will be happy to recant them, but they're all out there. We are going to be very particular about certain details that we're permitted to answer or not answer, particularly around the O token and around the baby token as they are actual securities. So the securities laws still apply, but we're going to do our best to answer questions and to give you the context of what we are working hard to accomplish, both at tZERO and at Beyond itself. For the first time, we are really excited about our company's ability to what we believe is issue the first token singularly related to the monetization of intellectual property. Well, what does that mean the monetization? There are a lot of coins out there. And some have funny names to them. And I think ultimately, people are looking to have broader adoption of what we believe is the future of commerce in America. This idea that the current administration has doubled down and sees the value of crypto and sees the value of blockchains is really what's driving our excitement around our company's ability to take hundreds of millions of dollars that were invested over several decades, along with the retail brands that the company owns and find the interconnectivity of them. In the early days, the goal is to keep it as simple as possible to get as widespread adoption as possible. This morning, we issued 2 separate and distinct press releases around 2 separate and distinct Reg CF offerings regarding a token singularly related to the Overstock business and brand and to the recently acquired Buy Buy Baby business and brand. I'll start with the first one. As many people know, the Overstock brand was established, I think it was 1989, if my memory is right, '89 -- '99, excuse me, I apologize. In 1999, over 25 years ago. And over the last 24 months, it's gone through its share of adjustments with the acquisition of Bed Bath & Beyond. There's a couple of footfalls. We believe, and you can go on to overstock.com today. We believe that, that brand is on its way back to something maybe even much better than it was at its height. The assortment is getting stronger every day. The platforming is getting stronger every day. The search functionality is getting better, and we're adding new products and services to it every single day. You can go on now and see luxury handbags and luxury jewelry from designer brands. So we're really, really excited about what we're seeing there. In celebrating its 25-plus years, we wanted to not only identify a moment in time that on an annual basis, we can come back to, but we wanted to figure out how the birth of tZERO, where it was actually founded, could be the first starting point and the first connection to the token. So on April 24, along with announcing 0 days, which is nothing more than having a big sale and celebration, we will be issuing the first token of a real-world asset singularly tied to intellectual property. It is our plan to have that token, be structured in a way where there's a direct correlation to the amount of money that the token holders would receive as the direct -- to the revenue that Overstock generates. The good news is Overstock is really at the early stages. We've disclosed publicly that it's already at $100-plus million run rate out of nowhere, and we have very, very high expectations for how that revenue would grow over the next several quarters and the next several years. It was important that in establishing the token that we were able to stand behind not only the efficacy of the business that's being tokenized, the contract itself, but the platform that it was going to go on to. It is important to recognize that Overstock is in its early stages. And so the token even at a great yield that we're anticipating it will be, should only get better. The second plan is to ensure that our current Beyond stockholders as of April 1, our current Beyond stockholders as of April 1 will be recalibrated and recollected. What that means is our proxy holders, our proxy administrators will go out and it will scrape every brokerage house and everything that's possible out there to query every single holder as of April 1. On April 24, the token will be issued. It will be available, marketed for sale. At that moment in time, a Beyond holder as of April 1 will enjoy a material discount or preferred pricing towards the market pricing that non-Beyond holders will enjoy. I want to be clear that the expectation that I have is that, that preferred pricing is very significant. We are going to issue all of the opportunities at the same time. It is a first come, first serve model. That's important to note. It is a first come, first serve model. But the way that we want the Beyond holders to see it is that they're being rewarded. It is my expectation, while I can't discuss because of the SEC, what the construct is that the yield for your cash should be better than most investment thesis that are out there in a savings account, a checking account, even if you were buying into a piece of real estate return. We want it to be very, very attractive. Once those tokens are sold, the company reserves the right to do an additional offering at a later date. But we are going to offer a small enough amount that we want to prove out what our belief is in the tZERO platform. We want Beyond holders to be materially rewarded for their loyalty and their ownership, and we want to make it available for non-Beyond holders as well. In addition to owning the token, there will be other benefits and advantages above and beyond financial yield of holding that token. Different access to sales, different first looks, but we are also not able to do the particulars, but I think they'll be meaningful enough to sit on top of the financial yield to make sure, be fully tokenized and held in a tZERO special purpose broker-dealer wallet that will be powered by fire blocks and smart contracts will be upgradable for future functionality, but it's important to know how that's going to work. So that happens on April 24. We are not going to have a beginning and an end date, but when the tokens are sold out, we will notify people and the transaction will close and it will be issued. If to provide a little bit more of a safety net, on the day of April 4, assuming that you are a stockholder on April 1, if the proxy solicitor is unable to capture everybody's information, we will provide a failsafe where you, as a current holder will be able to upload your information, your proof of ownership on that date and tZERO will validate that and will honor the pricing the same way they would. I will tell you, please be prepared to have proof of ownership just in case your stock is being held at a Morgan Stanley and they don't find it or there's some other loophole that doesn't allow it to be seen, I don't want you to be shut off. That same exact process of doing the beneficial ownership information collection on April 1 will be equally applied to the Buy Buy Baby token being issued on May 8. So it's going to be one essential effective date. Now the auditors and the lawyers were pushing me to use a date that's behind me, but nobody had that information and nobody knew what we were going to be doing this morning and I didn't feel like it was fair. For those of you that are beyond holders who were questioning the issuance of a token directly related to paying a fee or a royalty or a monetization on the revenue of Overstock, here's what I'm here to tell you. Brands are built on communities and communities are built on interests. And we want to be sure that not only Beyond holders are rewarded through results that show up on a quarterly basis through good acquisitions and divestitures that grow the value of their stock through the extraction of value in businesses like GrainChain and tZERO, but we need to build a community of followers that are specifically interested in one part of our business. And as our business grows and we acquire more businesses and more brands, every single holder may not be interested in everything. Here's an example. It would be my hope that in the future, we could look at tokenizing something like our ownership stake, our direct ownership stake in something like GrainChain or our direct ownership stake in something like tZERO or our direct ownership stake in something like Kirkland's. We reserve the right once we prove this thesis out to be able to demonstrate that we can do it with anything. Our belief is that tZERO is the right platform. Our belief is that there's talent there that understands that. Now they've heard me loud and clear that I don't like the front-facing interface of signing up for an account. We're working on that, and they have accepted our help. They have accepted the idea that we need an app fully functioning. That app got shut down when crypto went away. They acknowledged that. We appreciate the partnership as the largest holder of that company that the management team recognizes that. But we never, at Beyond, want to be limited with the optionality that we have in our company to tokenize anything and/or everything. As a Beyond holder myself and as a person interested -- most interested in the share price, we will be very smart about never undermining the ultimate value of our business, but purely demonstrating the offer of this option and the efficacy of these brands. I'm really excited to see GrainChain hit this because I see what's happening with that business. Keep in mind that there will be reporting requirements. So if you buy an Overstock token, and your token receives cash on an annual basis tied specifically to the growth of that business, we will be fully disclosing the results of that business so you could see Overstock did hypothetically, $127,453,000 during this period, and I am entitled to my pro rata share of that. Your goal is to be a leader. Your goal is to become a dual owner. You own the stock and you own the token. And most importantly, you become a customer. My thesis is built on what has happened over decades. And whether it's your moms Tupperware party or Avon or anything else that's like that, when you build a community of users and holders, you build momentum. And we're seeing that momentum happen at Overstock every single day. With Buy Buy Baby, we couldn't be more excited about what's happening there. And both with Overstock and with Buy Buy Baby, if there is ever an omnichannel presence of revenue, meaning that if Overstock exists online and Buy Buy Baby exists online and furthermore, either through our Kirkland's partner or some other arrangement, Overstock has a brick-and-mortar store or Buy Buy Baby has a brick-and-mortar store, you as the token holder would be equally entitled to revenue associated in that construct as well. Now there are other costs that are associated with operating that location. So your share of that revenue may be different online than it is in store. It may be. I haven't decided yet, but you should not be cut out from anything, not anything, including licensing that may have in the IP stores that may exist using the IP or any net revenue that may exist online. You would be entitled to that. As we go through this process, we're all going to learn a lot because this hasn't been done before. And we believe that Beyond can be at the forefront. If this works the way we think it's going to, you can expect our company, while we're driving towards profitability and very excited to tell you about our progress here coming shortly. While we're driving towards that, we'll continue to look at other 4-wall, 4-corner home-centric acquisition or partnership opportunities for our company where we can display our skill in running websites, display our skill in monetizing intellectual property and display our skill in understanding how to buy and sell things for a profit for our shareholders. As most people know, we recently announced a partial sale of Zulily. We sold 75% of it at a value of $6.6 million. As a reminder, we paid $4.5 million. We still hold 25% of that business, and it is our expectation that we will lend ourselves and our credibility to that partner, but that we needed to really get focused in the short term on getting to profitability, focusing on the home. I wasn't willing to give up 100%. The buyer wanted it. That wasn't a deal at any price I was willing to do. We recently have started to think differently about our Canada business and it could be in that short order, we end up tokenizing the Bed Bath & Beyond brand just in Canada. We may also offer the tokens to some of the vendors that operate in Canada to really create what I would call more of a joint venture where us as a company, the vendors as partners and you individually could all be part of building that model. We're going to try things across the globe and across our brands, never compromising the core cash flow and the core value of our Beyond shareholders. We all know that the stock has been on a wild rut, and I can't comment too much about how that makes us feel, but why we'll be resolute in one thing, and I've been very clear about it. We are on a path to profitability, and we are committed to seeing an inflection in 2025 that sees that green shoot have more than just grass. We believe we are making the right changes. More recently, we made a lot of headcount changes, made staff adjustments, made pay plan adjustments, and we are going to continue to adjust things for one goal, and that's getting to the base. If you read the release from this morning, you should sense and read particular words that are very much about growth. We are at a point with Overstock where we are no longer traction mode. We are no longer in heavy vendor consolidation mode. We are in vendor add, asset add, talent add and ad spend add, meaning we are -- we have decided that on this day, going forward that Overstock has reached a point where we are satisfied where it's time to press the gas. We're not quite there on Bed Bath yet. Getting close. We are about 50% of the way of consolidating our vendors. We are about 50% of the way of having the margin yield that we want, and we are about 50% of the way of having the tech deliver what I'm looking for. As we sit here today, Vercel, one of the best technology companies, is in the process of building the top-level stack, both there and at Overstock. Salesforce is in the final stages of getting ready to implement even another layer of progression across our databases and the progress feels not hypothetical anymore. It feels very real. Most of you can see Buy Buy Baby is now live. But we have isolated May 8, that's the Thursday before Mother's Day as the grand opening of not only the [ Technical Difficulty ]

Everybody, I think we're waiting for markets to get hooked back up. I don't know if anybody can hear me.

I can hear now. Can you guys hear me?

I can hear you. It's the usual X challenges, I think, probably. I thought I was getting kicked my Bluetooth shut off, all the stuff I started checking.