Earnings call transcript: Beyond Inc’s Q3 2025 sees narrowed net loss, stock rises

Beyond Inc (BBBY) reported its third-quarter 2025 financial results, showing a significant narrowing of its net loss and an improved gross margin, despite a year-over-year decline in net revenue. The company’s stock price experienced a notable increase in aftermarket trading, reflecting investor optimism. The earnings per share (EPS) and revenue figures missed the forecasted estimates. According to InvestingPro data, the company holds more cash than debt on its balance sheet, though it’s quickly burning through cash reserves.

Key Takeaways

• Beyond Inc’s Q3 net loss improved by 93% year-over-year.
• Gross margin increased by 420 basis points to 25.3%.
• Stock price rose by 5.02% in aftermarket trading.
• Revenue declined by 17% year-over-year to $257 million.
• EPS and revenue figures missed analyst forecasts.

Company Performance

Beyond Inc’s performance in Q3 2025 highlighted a substantial improvement in its financial health, with a narrowed net loss and an enhanced gross margin. Despite these gains, the company faced a 17% decline in net revenue compared to the previous year, with InvestingPro data showing a trailing twelve-month revenue decline of 26.6%. The company is focusing on transforming into an "everything home" ecosystem, leveraging technology and expanding its product categories to drive future growth. InvestingPro’s Financial Health Score indicates a weak overall position, suggesting continued challenges ahead.

Financial Highlights

• Revenue: $257 million, a 17% decline year-over-year.
• Net loss: Improved by 93% year-over-year.
• Adjusted EBITDA loss: Improved by 85%.
• Gross margin: 25.3%, up 420 basis points year-over-year.
• Average order value: Increased by 3%.

Earnings vs. Forecast

Beyond Inc’s actual EPS and revenue figures fell short of forecasts. The EPS forecast was -0.4633, while the revenue forecast was $259.83 million. The actual revenue was $257 million, indicating a miss in expectations. This shortfall reflects ongoing challenges in consumer confidence and spending patterns.

Market Reaction

Following the earnings release, Beyond Inc’s stock price rose by 5.02% in aftermarket trading, reaching $9. This movement suggests a positive investor sentiment despite the earnings miss, potentially driven by the company’s strategic initiatives and improved financial metrics. The stock’s performance contrasts with its 52-week high of $12.65 and low of $3.54, indicating a recovery trend. InvestingPro analysis shows the stock has demonstrated high price volatility, with a beta of 2.77, and has achieved an impressive 95.4% return over the past six months. For deeper insights into Beyond Inc’s valuation and 12+ additional ProTips, subscribers can access the comprehensive Pro Research Report.

Outlook & Guidance

The company remains committed to achieving positive revenue growth in 2026, with a focus on improving conversion rates and expanding its product margin to between 24-26%. Beyond Inc plans to increase its conversion rate from 1.1-1.2 to over 1.3, which could potentially add $27-35 million in additional revenue. With current gross margins at 23.1% and four analysts revising earnings estimates upward for the upcoming period, the company shows potential for improvement despite current challenges.

Executive Commentary

"We’re building something enduring, and we’re doing it the right way," stated Marcus Lemonis, Executive Chairman. He emphasized the role of AI in enhancing staffing efficiency and customer experience, underscoring the company’s commitment to technological integration. Lemonis also highlighted the company’s preparedness for a full assortment by spring 2026.

Risks and Challenges

• Supply chain disruptions could impact inventory levels and sales.
• Consumer spending patterns remain uneven, affecting revenue growth.
• The company’s ability to effectively integrate new technologies and platforms.
• Competitive pressures in the home and retail sectors.
• Economic uncertainties and their impact on consumer confidence.

Q&A

During the Q&A session, analysts inquired about supplier pricing pressures and the company’s plans for AI automation in customer service. The discussion also covered personalized marketing strategies and technology stack improvements at Overstock.com, reflecting investor interest in the company’s technological advancements and operational efficiencies.

Full transcript - Beyond Inc (BBBY) Q3 2025:

Jeannie, Conference Operator: Thank you for standing by. My name is Jeannie, and I will be your conference operator today. At this time, I would like to welcome everyone to the third quarter 2025 Bed Bath & Beyond Inc. earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Melissa Smith, General Counsel and Corporate Secretary. You may begin.

Melissa Smith, General Counsel and Corporate Secretary, Bed Bath & Beyond: Thank you, operator. Good afternoon and welcome to Bed Bath & Beyond Inc.’s third quarter 2025 earnings conference call. Joining me on the call today are Executive Chairman and Principal Executive Officer, Marcus Lemonis, and President and Chief Financial Officer, Adrianne Lee. I’m also joined by Alex Thomas, Chief Operating Officer.

Today’s discussion and our responses to your questions reflect management’s views as of today, October 27, 2025, and may include forward-looking statements, including without limitation, statements regarding our quarterly earnings reporting, forecast of, and plans for our growth, revenue improvement, profitability or sustained profitability, business strategy, including plans for enhancing customer and shopping experience, our long-term goal of becoming the everything home company, margin consistency, improved conversion, expected conversions of retail locations, planned expense reductions, value and monetization of our intellectual property, future strategic ventures, including in PropTech Solutions, improved financial performance, progress of, and plans for the platforms we invest in, plans for improved efficiencies and technology-based solutions, including AI-driven strategies, and 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, our Form 10-Q for the fiscal period ended September 30, 2025, and in our subsequent filings with the SEC. During this call, we’ll discuss certain non-GAAP financial measures. Our filings with the SEC, including our third 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 two of that presentation. With that, let me turn the call over to you, Marcus.

Marcus Lemonis, Executive Chairman and Principal Executive Officer, Bed Bath & Beyond: Thanks, Melissa. I feel like we took the whole time to do the disclosures, but good afternoon, everyone, and thank you for joining us for the third quarter call. As many are aware, consumer confidence and spending patterns remain uneven, but we continue to outperform our own expectations by staying disciplined, focused, and very customer-centric. During the quarter, we completed our name change back to Bed Bath & Beyond, a brand that continues to hold deep connection and trust with consumers across homes. The third quarter marked another strong step forward for Bed Bath & Beyond, our seventh consecutive quarter of measurable improvement towards achieving profitability. We’ve stabilized the business and are positioned for growth.

Year over year, we delivered a 93% improvement in net loss and an 85% improvement in adjusted EBITDA, a 420 basis point increase in gross margin, driven by disciplined execution, sharper focus, and much smarter spending. We know what’s working, and we also know what still needs improvement. Ahead, we’ll place greater emphasis on data-driven decisions, faster technology, and customer-focused solution-based experiences. As we enhance our technology and analytics team, we’re combining top internal talent with external experts and auditing every part of the customer journey to ensure personalized solicitation, discovery, checkout, and post-purchase experiences to deliver the conversion and retention our financial model requires. During the quarter, we strengthened our foundation. We invested an additional $3 million in GrainChain, our blockchain-based supply chain platform, acquired the Kirkland’s Home intellectual property for $10 million, adding another trusted home brand to our family, and raised approximately $113 million through our ATF.

We’re using this liquidity to strengthen the balance sheet, expand existing investments, and pursue strategic investments or acquisitions in non-retail, home-centric technology, data, products, services, and select PropTech solutions, all aimed at building out our everything home business. Homeowners today need simple, innovative technology to help them maintain their homes, manage products, projects, and realize the full potential of their property, including a personalized, frictionless shopping experience. Over time, we see PropTech playing a growing role in how consumers maintain, finance, and optimize their homes, and how we help them unlock more value from where they live. Across the business, execution is improving, and the results reflect it. We’ve also continued to invest in the platform shaping our future. Both tZERO and GrainChain are making steady progress.

At tZERO, over the last several months, we’ve driven the kind of change we expect: new leadership, a sharper outlook, and as of today, an acknowledgment that pursuing a public market listing could unlock new value. While tZERO has multiple growth paths, our focus is on its ability to unlock value for asset managers and homeowners. Fractional ownership, digital transparency, and verified title records can reshape how people access and invest in property, directly supporting our everything home mission. GrainChain continues to advance as a blockchain platform, modernizing supply chains tied to home-related commerce. It improves transparency and efficiency across materials, logistics, and finished goods, strengthening trust across the ecosystem that builds and furnishes the home. Together, tZERO and GrainChain connect the digital and physical worlds, enhancing transparency, ownership, and value creation.

Alongside these efforts, PropTech will help integrate the home itself into this ecosystem, linking ownership, supply chain, and consumer experience in a way that’s unique to Bed Bath & Beyond. With that, I’ll turn the call over to Adrianne to review the results.

Melissa Smith, General Counsel and Corporate Secretary, Bed Bath & Beyond: Thank you, Marcus. We are proud of the progress this quarter. Our focus on execution, efficiency, and balance sheet strength continues to deliver results. Net revenue was $257 million for the third quarter, down 17% year over year, or 13% excluding the impact from our exit from Canada. Average order value improved 3%, driven by our continued focus on assortment, removing unproductive SKUs and leaning into better best offerings. This was partially offset by lower orders; however, I’m pleased orders were nearly flat versus the second quarter, highlighting business stability. Gross margin was 25.3%, up 420 basis points year over year, driven by lower fulfillment and returns costs and tighter promotions. Sales and marketing expense improved by 260 basis points to 14% of revenue, reflecting a more efficient channel allocation and improved return on spend.

Notably, our efficiency has been relatively consistent throughout 2025, which makes it a good place to take additional steps towards improved efficiencies. This month, we launched a new private label credit card as an important retention tool step. Technology and G&A expense declined by $13 million year over year as we right-sized our org structure, streamlined vendors, and automated key functions. All in, net loss narrowed by $4.5 million, a 93% improvement year over year, and adjusted EBITDA loss of $4.9 million improved 85%. We ended the quarter with $202 million in cash equivalents and inventory, plus $2 million from ATM settlements post quarter end. We believe our improved balance sheet provides stability and flexibility for the future. Operationally, versus a year ago, average order value is up. Fulfillment costs and returns are down. Marketing is more efficient, with owned channels performing better, and fixed costs are down.

All early signs that our digital and operational work is paying off. With that, I’ll turn it back to Marcus for closing remarks and our view on 2026.

Marcus Lemonis, Executive Chairman and Principal Executive Officer, Bed Bath & Beyond: Great. Thanks, Adrianne. While we’re encouraged by our progress, the footing we found isn’t enough. We’re not satisfied. Our sales and marketing expense remains higher than we want, and conversion is key. The shopping experience is improving, but still requires more focus on the customer experience. Improved cart conversion, suggested cart building, increased personalization, and site speed are at the top of our list. We’re integrating AI-driven strategies to improve both the customer experience and platform efficiency, predicting intent, personalizing recommendations, and streamlining operations. Look, the groundwork is being laid for lasting improvement in engagement and conversion. Our goal is to deliver a simple, user-centric experience that earns confidence and trust. Over the next several quarters, we intend to broaden our connection with customers by focusing on how they live, how they manage, and how they create value around their home.

Whether through the tools that help them create value, manage products, or unlock the value in their homes, Bed Bath & Beyond will not be purely a retail play. Transactions, both online and in-store, are meant to build relationships, and those take time to nurture. Our omnichannel transformation is progressing, and we expect all 250 locations converted by mid-2026. Together with our local franchise model, this creates an asset-light network of local operators using our brand, our infrastructure, and assortment to reach more markets efficiently. We’ve also identified $20 million in additional operating expense efficiencies that we expect to realize over 2026, reinforcing that spend discipline remains a priority, specifically targeting a 2026 goal of 12% around our marketing expense.

As we look forward to 2026, our focus is clear: expand the everything home ecosystem, connecting retail, services, and digital innovation, deepen AI and data integration to drive smarter marketing, better conversion, and stronger retention, maintain margin discipline while driving top-line sellers, and continue to deliver consecutive quarters of bottom-line improvement on a year-over-year basis. The combination of retail scale, technology innovation, and asset management makes Bed Bath & Beyond uniquely positioned in the home category. Through our marketplaces, our brands, technology platforms, and emerging PropTech capabilities, we’re building a connected ecosystem that creates long-term value for our shareholders and, most importantly, our customers alike. The majority of the heavy lifting is behind us. Now it’s time to accelerate, to be more accountable, and to have consistent execution. To our team, thank you for your focus and resilience.

To our partners and board, thank you for your trust and support, and to our shareholders, thank you for your longstanding confidence. We’re building something enduring, and we’re doing it the right way. We’ll now open up the call for questions.

Jeannie, Conference Operator: At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. Your first question comes from a line of Stephen Forbes with Guggenheim Securities. Your line is open.

Good evening, Marcus, Adrianne. Hi, Marcus. I was curious if you could maybe expand on a comment you just made around targeting the 12% sales and marketing expense ratio in 2026 as we think about that in conjunction with this return to growth narrative that you have within the press release. Maybe you could just expand on the conviction there, right? Like, where are the efficiencies coming from as you see it? Is the return to growth narrative also indicative of you seeing stability in the active customer base on the horizon?

Marcus Lemonis, Executive Chairman and Principal Executive Officer, Bed Bath & Beyond: Let me break that down, Stephen, into two sections. From a growth mindset standpoint, we believe that we have found the bottom and that we intentionally landed the plane quarter after quarter after quarter in the 2025 calendar year in the same range of revenue to prove out that we can take the individual KPIs that built the financial statement and saw improvements in those. Whether that’s margins, sales and marketing, et cetera, we knew we needed to do that on a consistent basis, not a flash in the pan. We felt like the revenue being all over the place, big highs and big lows, would not give us that really uncontaminated view of where we needed to be. Through that process, though, it also uncovered a number of inefficiencies in our business. Where we really have not delivered from an expectation standpoint is around conversion.

Anytime you look at driving revenue and improving conversion, the one toggle that’s inside of there, aside from site sales and being overly promotional, is how much money are you spending to bring people to the party? Over the last couple of years, I think when the company bought the intellectual property out of Bed Bath & Beyond in 2023, it made the great misstep or miscalculation of assuming that the data that it acquired was going to translate into e-commerce revenue. What we learned is that we needed to spend a considerable amount of time and money augmenting and segmenting the data to really understand who those customers were, where they originally came from, what their propensity was to do business with us, and how are we going to re-attract them to our business and, more importantly, convert them into the second sale.

If you go back and you look at the financial statement at the end of 2023 and, quite frankly, most of 2024, we were just adding as many people to the file with no real logic behind the lifetime value calculation inside of them. It became buy a PLA ad, sell a couch, lose a couple hundred bucks, and then not really worry about how we’re going to retain them. What’s really been instrumental in 2025 is we’ve started to see retention start to tick up. While we’re not disclosing those numbers just yet until we know that they’re pure and not contaminated, we have started to see return buyers come back on a, quite frankly, more repetitive basis than we had originally anticipated. When we look at the target of 12% for 2026, we know there’s a multitude of factors.

I’ll start with us really making sure that the data set that we have, both from our omnichannel partner, our different brands, legacy data, is clean, pure, deduped, and really in a condition that can be monetized. I think the second thing that we learned is that one size doesn’t fit all. In 2024, and even the first part of 2025, it was like a ready aim fire. We would just send emails out to everybody. There was no personalization. We’ve started testing a high level of personalization using the Overstock.com platform first, largely because the risk wasn’t as severe if we made a mistake. We’re seeing site speed increase, conversion increase, but more importantly, we’re seeing consumers who are served up a personalized experience start to convert better, start to engage better, and start to return at a better rate.

I think additionally, as we think about it, we have work to do in our performance marketing. Our performance marketing over the previous 12 months has been good. It’s been good enough for 2025. It is not good enough for 2026. Whether that’s continuing to cleanse the site, continuing to work on different strategies, we know that between adding internal talent and partnering with external talent, we think there is a ton of money left on the table. Could be as much as $10 million of inefficient spend still existing in our business today. I look at inefficient spend as a low-efficient margin transaction with a low propensity to return. That’s what I consider inefficient. It’s not, did we have a positive ROAS of some amount?

We have a finite amount of capital, and we want to make sure that we’re chasing that capital, chasing that customer with a high contribution margin, 6%, 7%, 8% contribution margin, with a high AOV and a high likelihood to return again. That’s ultimately the stack that we think we need to build. There is a lot of conviction, and there’s a lot of work to get there at the same time. I wanted to put that number out there both for external purposes and to lay the gauntlet down that in our side of our business, % is the mandate.

That was super helpful. Maybe just a quick follow-up. Nice to see the gross margin progression in the quarter. I don’t think you updated, you haven’t, right, in the presentation, sort of that medium-term target of 25%. I just wanted to sort of ask the question if the third quarter has informed sort of your medium-term or long-term gross margin targets or if this is just a more accelerated recapture pace.

I’m going to look at the margin on a transaction basis first, just to kind of give you my holistic view of how I’m thinking about the overall transaction margin. I’m going to separate it from the product margin specifically inside of that transaction. We have set a short-term to medium-term goal of a product margin between 24% and 26%. I will tell you that in some cases, we’ve been very successful at avoiding tariff price increases and getting caught up in that overly promotional, call it tariff black hole. We do have to recognize, though, that as we start to add our omnichannel business, particularly on the textile side, bedding and towels, they’re going to come with a, call it, in-stock margin of 55% to 57%, giving us the ability to get some margin accretion on the soft side of things, on the textiles.

Conversely, on the other side, we believe there are a number of categories where we’re not as competitive as we need to be. You look at some of the upholstered furniture and some of the patio business, and we could be missing out on some market share. Rather than just pulling the ripcord and going for it, we knew that we needed to augment that or sort of mitigate whatever risk would exist in going after market share for those higher AOV transactions with higher gross dollars by supplementing it with the textile margins at 55%, 60%, just to find that balance.

We believe that we’ll be prepared and in stock in the spring of 2026 with that full assortment in our partner’s warehouse in Jackson, Tennessee, giving us the ability to be more competitive, far more competitive, and far more margin accretive on that side, giving us permission to be more aggressive on the furniture side. That’s partially what’s giving me the confidence that we will be able to maintain that margin range while growing revenue. We just need that offset to help.

Thank you.

As part of that, the other piece that we notice in the overall transaction is our product protection warranties have started to really accelerate. As we continue to improve attachment on that, we’ll look at that overall transaction profitability. As we start to see the private label credit card integrate the transaction, we’ll look at the money we make on that. We need these other little attachments to more than just the product. Whether that’s shipping insurance, product warranties, using our credit card, or something else, we need that whole blend to come together so that the overall transaction is more profitable than 2024 to 2026.

Thank you, Marcus.

Yep.

Jeannie, Conference Operator: Your next question comes from the line of Tom Forte of Maxim Group. Please go ahead.

Hi. Good evening, everybody. This is Francesco Marmo, filling in for Tom. Just one quick question for me. Could you please elaborate on your comments of the expected revenue growth on a year-over-year basis expected for 2026? If you can give us some color around what particular initiative you think is going to drive that and what kind of shapes that growth profile should we expect?

Marcus Lemonis, Executive Chairman and Principal Executive Officer, Bed Bath & Beyond: Yeah, thank you. As a reminder, we don’t provide guidance on either revenue or bottom line, but we are committing today to have positive revenue growth in 2026. Part of that revenue growth is really much of what I said to Steve a minute ago, which is really understanding how we can balance being an asset-light company and utilizing the supply chain and the store footprint of our omnichannel partner to really bring in overall revenue and overall margin increases. I expect that to be, I wouldn’t call it material, but I expect conservatively for it to be positive. I think additionally, we need to continue to explore new categories.

If you look at what we did at Overstock.com in 2025, we could potentially end up generating anywhere between $15 million and $20 million in Overstock.com alone that came from categories that did not exist for almost a half a decade. That is in the luxury space, in the jewelry space, and in some of those other categories, a little bit of apparel as well. We never want to use those three things as foundation builders for our overall business, but we do want to use those things as value anchoring around the rest of the products that we sell. Overstock.com will and probably always will be largely driven by rugs, number one, patio, number two, and upholstered furniture, number three. We’re trying to find the balance of how it can coexist with brands and certain values and not contaminate our Bed Bath & Beyond business.

On the Bed Bath & Beyond side, what we expect to happen in 2026 is the collaboration of the merchandising organizations between our omnichannel partner and our existing marketplace merchandising team. It’s no crack on anybody one way or the other, but I think that the current merchandising team that we have at bedbathandbeyond.com is really just Overstock.com people reskinned and rebranded. They knew patio, rug, and furniture. What we’re finding and seeing on the omnichannel side is that that group are subject matter expertise in kitchen, housewares, textiles, decor, and a variety of other things that our current group doesn’t either possess the relationships with or the know-how.

As we merge those two merchant organizations full stop in 2026, you’ll see better category segmentation, whether it’s in the bedding, bath, kitchen, furniture, patio categories, and a deeper and broader knowledge of how to drive more vendors to the site, how to drive increased penetration to the site, and how to present the product in a way that we think is going to ultimately help conversion. The last thing, and maybe the most important thing, if conversion improves, revenue will also improve because it is literally spend a certain amount on a day, get a certain amount of traffic, and then get a certain amount of conversion. We need at least, you know, we’re operating in the 1.1 range, 1.2 range. We need to be north of 1.3 in the short term. That doesn’t sound like a lot.

It’s probably $27 million to $35 million of revenue with a good contribution margin in the 6% to 8% range, all falling to the bottom line without any incremental expense. When we start thinking about revenue growth, it’s not really a hope to, it’s a have to.

Great. Thank you very much.

Yep.

Jeannie, Conference Operator: Your next question comes from the line of Jonathan Matuszewski with Jefferies. Please go ahead.

Hey, good afternoon, and thanks for taking my questions. Marcus, my first one was just on what you’re hearing from conversations with your suppliers as it relates to their willingness to pass along price on your marketplace, maybe last quarter relative to maybe the first half, and whether you’re picking up on any change in behavior on their behalf with the more recent tariff noise. Obviously, AOV is moving in the right direction for you guys. I think some of it is idiosyncratic with initiatives to reduce markdowns, but just wanted to get a sense of maybe what you’re seeing, maybe on a like-for-like basis on your platform. Thanks.

Marcus Lemonis, Executive Chairman and Principal Executive Officer, Bed Bath & Beyond: Yeah. As you would imagine, and a lot of credit goes out to the suppliers that feed our company, there has been a lot of pressure on them for longer than just a quarter in dealing with the tariffs and, quite frankly, the lack of predictability around them. I’d like to tell you that I have a crystal ball on what’s going to happen today, tomorrow, next week, and next year, and I do not. What we’ve told our team internally is we want to really be thoughtful to ensure that the relationship that vendors have with us is a profitable relationship. We have to find ways to take other frictions out of our own business to mitigate some of the costs that we believe that they should pass on. Now the question is, how do we pass those on?

What has happened in the last quarter is there’s been a perfect blend, in my opinion, between understanding where the elasticity curve is, understanding how much the vendor can take on, and us accepting the willingness to take it on as well. We believe that as Bed Bath & Beyond rebuilds its credibility in the marketplace, both in-store and online, vendors need to feel like this is a profitable, risk-free relationship. As we look forward to 2026, we understand that there could be more pricing pressure that could be presented both to the vendors, then to us, then to the consumer. What we have landed on is that that’s probably going to happen. We’re almost operating under the assumption, as we built out our 2026 forecast, that that’s probably going to happen.

What we need to do and what we are doing now is continuing to eliminate those unprofitable SKUs or vendors who aren’t giving us a profitable transaction and doubling down with those vendors who we can generate some profitability with. As we accept that pressure, coming back around to them and looking for volume targets and rebates associated with them to make the 365-day margin profile look as healthy as we need it to. I don’t know that vendors could absorb much more today, particularly on the upholstered furniture side. It seems like every time we turn around, the sourcing of origin is shifting. One week it’s China, the next week it’s India, the next week it’s somewhere else, then it’s back to China. It’s been difficult, to say the least.

I think part of the benefit of being an asset-light retailer is that we don’t have a ton of risk in our inventory. Even as we think about our huge investment in the omnichannel business, we’re not talking about, you know, hundreds of millions of dollars sitting in warehouses. We’re talking about $150 to $175 per store and, you know, enough safety stock in the warehouse. For us, it’s a perfect blend of sourcing and good margin management.

That’s helpful. A quick follow-up. You mentioned removing costs in your own business to kind of soften the blow for vendors. We’ve been picking up on more and more AI automation in the customer service function as of late, a number of examples in home furnishings. How do you think about a potential cost-savings opportunity for Bed Bath & Beyond if you were able to increasingly automate a chunk of your potential chat inquiries? Is that something you’re exploring? Thanks.

Everybody should assume that AI is an absolute mandate inside of our company, as it is in almost every company. I think we’re in a unique position where we have a pretty blank canvas and we don’t have a lot of, I would call it, technical debt from a legacy standpoint. Sure, we need to improve our unified code structure and our base of how we’re operating. We probably have some work to do in our PIM. We think that we’re at this really interesting tipping point where when we decide to make new investments into a PIM or into a POS in our omnichannel business, we have a clean slate of paper and not a lot of historical contracts or kind of dead weight dragging us down. I’ve said this internally and externally, AI will solve really two problems for our company. One, it will create staffing efficiency.

What does that mean in plain English? We will be able to operate with less people and have greater efficiency. That isn’t a maybe or a would like to, that’s a it’s going to happen in 2026. Number two, we believe that AI will create a better customer experience. Again, I’m going to tie it back to conversion. Can we find the customers in a more personalized way, communicate to them what they want, when they want it, how they want it, and be able to get better, better conversion in the moment and retention in the long haul? We are, however, for the first time in history, not acting like we’re the company that can build everything. You always hear this buy it, build it mentality.

One of the things that I did establish during the quarter is that we created a special committee at the Board of Directors level that sits side by side with Audit and with Compensation, with Governance in the Tech Committee. The chairperson of that Tech Committee is, quite frankly, a very, very astute person. We have started to engage in third parties, having people come in and tell us what we need to do in our business and not assuming that this company has to build everything that it does. I would expect a big, bright future. It’ll happen fast. We’re happy to be on that roadmap.

Thanks, Marcus.

Jeannie, Conference Operator: Your next question comes from the line of Bernie McTernan with Needham. Please go ahead.

Great. Thanks for taking the question. Maybe just a follow-up from one of the previous questions, talking about the personalization tools and how they’re working on Overstock.com right now. What’s the timeline to think about those coming to Bed Bath & Beyond? Does that inform maybe the quarterly cadence of revenue expecting next year? Obviously, on a full-year basis, expecting it to be positive, but how should we expect it to trend throughout the year, acknowledging you don’t want to provide guidance? We might be overreaching here, but figure that we try.

Marcus Lemonis, Executive Chairman and Principal Executive Officer, Bed Bath & Beyond: During the third quarter, unbeknownst to probably anybody, we moved on to a new unified tech stack at Overstock.com. It was a big risk for us. We chose to do it there because we knew that there were conversion contaminants that can hurt our business. To be candid with you, we believe that we probably, through the quarter, because of the swap over from Shopify, which was a great system in itself but didn’t give us all the marketplace tools we were looking for, we feel like that transition, along with a slow and delayed ShopPay and Apple Pay integration into Overstock.com, probably cost us $7 million of top line in the quarter. I could be probably more specific, $6.2 million if you look at what we lost, 30,000 orders at an average of $210 for the quarter.

We feel very good because since we launched it, the revenue has not only bounced back, but the conversion has started to accelerate. We are going to take one solid more quarter at a minimum to ensure that we, as we add Apple Pay, as we add ShopPay, as we add other features and benefits to that platform, that we know that we have built it. Now, the way that Overstock.com unified code structure was built is that we put a top layer on top of it. We layered Vercel on top of it, which really gave us the ability to speak to each consumer in a very specific way, meaning that customer X and customer Y may, in some cases, see something totally different. One of the byproducts of that stack was that the site moves faster.

Until we see a 1.3% or better conversion, until we start to see 10%, 15% quarter over quarter growth for Overstock.com, I don’t want to tinker or risk the massive revenue that Bed Bath & Beyond does today. I will tell you, however, that we are learning things. Whether it’s the cart checkout process and how to improve the process there, we aren’t waiting to bring over certain portable ideas that don’t require a whole new evolution. It would be my hope that by mid-year, maybe middle of third quarter, we will have modified the code structure at Bed Bath & Beyond. There are two simple reasons. One, we hope to have all the Bed Bath & Beyond version stores open by mid-2026.

We hope to be able to have a consumer experience that ties the POS and a new unified code structure together so that the customer can transact however they want. Buy online, pick up in store, buy online, you know, ship from store, or be in store and add something to my order that comes from the dot-com business. We’ve been spending the last couple of months architecting what we think that could look like. We are bringing on some new talent to be announced shortly and some new vendor partners to be announced shortly that we think tie all of that together. It won’t be tied together with one single company. It will be tied together with multiple subject matter experts that integrate properly into something like that.

Time, testing, and proof is what we are running this business with, which is why you see seven quarters of material improvement. We want that to continue.

Got it. Very helpful. Thanks, Marcus.

Yep.

Jeannie, Conference Operator: Due to time constraints, this concludes today’s question and answer session. I will now turn the call back over to Marcus for closing remarks.

Marcus Lemonis, Executive Chairman and Principal Executive Officer, Bed Bath & Beyond: Great. Thank you so much. As we mentioned earlier, the most important thing for us is to have people, you know, be comfortable. As the company prepares for 2026, we expect year-over-year revenue trends to turn positive. We believe this upward trajectory, combined with margin consistency, an additional $20 million in operating expense efficiencies, and improved site conversion, position the company to achieve its profitability objectives. Thank you, and we’ll see you next quarter.

Jeannie, Conference Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.