8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15 (d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported)  June 27, 2018

BED BATH & BEYOND INC.

(Exact name of registrant as specified in its charter)

New York	0-20214	11-2250488
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

650 Liberty Avenue, Union, New Jersey 07083

(Address of principal executive offices)    (Zip Code)

(908) 688-0888

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  o

Item 2.02Results of Operations and Financial Condition

On June 27, 2018, Bed Bath & Beyond Inc. (the “Company”) issued a press release announcing the Company’s financial results for its fiscal first quarter ended June 2, 2018.  A copy of this press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 7.01Regulation FD Disclosure

On June 27, 2018, the Company published an Investor Presentation for its fiscal first quarter ended June 2, 2018 as noted in the press release described in Item 2.02 above. The Investor Presentation is attached hereto as Exhibit 99.2 and is incorporated herein by reference. Additionally, the Company has posted the Investor Presentation on the investor relations section of its website at www.bedbathandbeyond.com.

The Company’s June 27, 2018 press release further announced that its Board of Directors has declared a quarterly dividend of $0.16 per share, to be paid on October 16, 2018 to shareholders of record as of the close of business on September 14, 2018.

The information in this Current Report on Form 8-K (including the exhibits attached hereto) is being furnished under Items 2.02 and 7.01 and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of such section or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01Financial Statements and Exhibits

(d)Exhibits:

Exhibit No.	Description
99.1	Press Release issued by Bed Bath & Beyond Inc. on June 27, 2018.
99.2	Investor Presentation for the fiscal first quarter ended June 2, 2018.

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	BED BATH & BEYOND INC.
	(Registrant)
Date: June 27, 2018	By:	/s/ Robyn M. D’Elia
		Robyn M. D’Elia
		Chief Financial Officer and Treasurer
		(Principal Financial and Accounting Officer)

3

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

BED BATH & BEYOND INC. REPORTS RESULTS

FOR FISCAL 2018 FIRST QUARTER

·Company Remains On Track with Fiscal 2018 Modeling Assumptions and 3-Year Financial Goals

·Net Earnings Per Diluted Share of $.32

·Net Sales Increased Approximately 0.4%; Comparable Sales Declined Approximately 0.6%

·Board of Directors Declares Quarterly Dividend of $0.16 Per Share

UNION, New Jersey, June 27, 2018 -— Bed Bath & Beyond Inc. (NASDAQ:BBBY) today reported financial results for the first quarter of fiscal 2018 ended June 2, 2018.

Fiscal 2018 First Quarter Results

For the fiscal 2018 first quarter, the Company reported net earnings of $.32 per diluted share ($43.6 million), which included the following: an unfavorable impact of approximately $0.06 from severance costs incurred in the first quarter, which was not included in the Company’s fiscal 2018 modeling assumptions; and a favorable impact of approximately $0.05 from the adoption of the new accounting standard, FASB ASC 606, Revenue from Contracts with Customers, which was anticipated and included in the full-year modeling assumptions. Net earnings for the fiscal 2017 first quarter were $.53 per diluted share ($75.3 million).

Net sales for the fiscal 2018 first quarter were approximately $2.8 billion, an increase of approximately 0.4% from the prior year quarter.  Comparable sales in the fiscal 2018 first quarter decreased by approximately 0.6%, and included strong sales growth from the Company’s customer-facing digital channels, and sales from stores that declined in the mid-single-digit percentage range.

Capital Allocation

The Company’s Board of Directors today declared a quarterly dividend of $.16 per share payable on October 16, 2018 to shareholders of record at the close of business on September 14, 2018.

During the fiscal 2018 first quarter, the Company repurchased approximately $22 million of its common stock, representing approximately 1.2 million shares, under its existing $2.5 billion share repurchase program.  As of June 2, 2018, the program had a remaining balance of approximately $1.5 billion.

The Company ended the fiscal 2018 first quarter with $847 million in cash and investment balances, an increase of approximately $281 million, compared with approximately $565 million at the end of the fiscal 2017 first quarter.

Fiscal 2018

During the conference call with analysts and investors, the Company plans to review its quarterly results and its financial planning assumptions for fiscal 2018.

The Company’s planning assumptions reflect actual results through the fiscal first quarter and the current trends the Company has been experiencing.  Based on its planning assumptions, the Company continues to model net earnings per diluted share for the full year to be in the low-to-mid $2.00 range.

The Company remains on track with its three-year financial goals that comprise its vision for 2020 which include:  to achieve comparable sales growth beginning in fiscal 2018; to achieve moderating declines in operating profit and net earnings per diluted share in fiscal 2018 and fiscal 2019; and to achieve growth in net earnings per diluted share by fiscal 2020.

Fiscal 2018 First Quarter Conference Call and Investor Presentation

Bed Bath & Beyond Inc.’s fiscal 2018 first quarter conference call may be accessed by dialing 1-888-771-4371, or if international, 1-847-585-4405, using conference ID number 47122204. The replay of the call can be accessed by dialing 1-888-843-7419, using conference ID number 47122204.  The call and replay can also be accessed via audio webcast on the investor relations section of our website at www.bedbathandbeyond.com.

The Company has also made available an Investor Presentation on the investor relations section of its website that provides information related to its strategic initiatives, fiscal first quarter financial results, and modeling assumptions for fiscal 2018.

About the Company

Bed Bath & Beyond Inc. and subsidiaries (the “Company”) is an omnichannel retailer selling a wide assortment of domestics merchandise and home furnishings which operates under the names Bed Bath & Beyond, Christmas Tree Shops, Christmas Tree Shops andThat! or andThat!, Harmon, Harmon Face Values or Face Values, buybuy BABY and World Market, Cost Plus World Market or Cost Plus. Customers can purchase products either in-store, online, with a mobile device or through a customer contact center. The Company generally has the ability to have customer purchases picked up in-store or shipped direct to the customer from the Company’s distribution facilities, stores or vendors. In addition, the Company operates Of a Kind, an e-commerce website that features specially commissioned, limited edition items from emerging fashion and home designers; One Kings Lane, an authority in home décor and design, offering a unique collection of select home goods, designer and vintage items; PersonalizationMall.com, an industry-leading online retailer of personalized products; Chef Central, an online retailer of kitchenware, cookware and homeware items catering to cooking and baking enthusiasts; and Decorist, an online interior design platform that provides personalized home design services. The Company also operates Linen Holdings, a provider of a variety of textile products, amenities and other goods to institutional customers in the hospitality, cruise line, healthcare and other industries. Additionally, the Company is a partner in a joint venture which operates retail stores in Mexico under the name Bed Bath & Beyond.

The Company operates websites at bedbathandbeyond.com, bedbathandbeyond.ca, worldmarket.com, buybuybaby.com, buybuybaby.ca, christmastreeshops.com, andthat.com, harmondiscount.com, facevalues.com, ofakind.com, onekingslane.com, personalizationmall.com, chefcentral.com, decorist.com, harborlinen.com, and t-ygroup.com.  As of June 2, 2018, the Company had a total of 1,557 stores, including 1,017 Bed Bath & Beyond stores in all 50 states, the District of Columbia, Puerto Rico and Canada, 279 stores under the names of World Market, Cost Plus World Market or Cost Plus, 121 buybuy BABY stores, 83 stores under the names Christmas Tree Shops, Christmas Tree Shops andThat! or andThat!, and 57 stores under the names Harmon, Harmon Face Values or Face Values.  During the fiscal first quarter, the Company opened one Bed Bath & Beyond store, four World Market stores, and two buybuy BABY stores, and closed one Bed Bath & Beyond store and one Cost Plus World Market store.  The joint venture, to which the Company is a partner, operates ten stores in Mexico under the name Bed Bath & Beyond.

Forward-Looking Statements

This press release may contain forward-looking statements.  Many of these forward-looking statements can be identified by use of words such as may, will, expect, anticipate, approximate, estimate, assume, continue, model, project, plan, goal, and similar words and phrases.  The Company’s actual results and future financial condition may differ materially from those expressed in any such forward-looking statements as a result of many factors. Such factors include, without limitation: general economic conditions including the housing market, a challenging overall macroeconomic environment and related changes in the retailing environment; consumer preferences, spending habits and adoption of new technologies; demographics and other macroeconomic factors that may impact the level of spending for the types of merchandise sold by the Company; civil disturbances and terrorist acts; unusual weather patterns and natural disasters; competition from existing and potential competitors across all channels; pricing pressures; liquidity; the ability to achieve anticipated cost savings, and to not exceed anticipated costs, associated with organizational changes; the ability to attract and retain qualified employees in all areas of the organization; the cost of labor, merchandise and other costs and expenses; potential supply chain disruption due to trade restrictions, political instability, labor disturbances, product recalls, financial or operational instability of suppliers or carriers, and other items; the ability to find suitable locations at acceptable occupancy costs and other terms to support the Company’s plans for new stores; the ability to establish and profitably maintain the appropriate mix of digital and physical presence in the markets it serves; the ability to assess and implement technologies in support of the Company’s development of its omnichannel capabilities; uncertainty in financial markets; volatility in the price of the Company’s common stock and its effect, and the effect of other factors, on the Company’s capital allocation strategy; disruptions to the Company’s information technology systems including but not limited to security breaches of systems protecting consumer and employee information; reputational risk arising from challenges to the Company’s or a third party supplier’s compliance with various laws, regulations or standards, including those related to labor, health, safety, privacy or the environment; reputational risk arising from third-party merchandise or service vendor performance in direct home delivery or assembly of product for customers; changes to statutory, regulatory and legal requirements, including without limitation proposed changes affecting international trade; changes to, or new, tax laws or interpretation of existing tax laws; new, or developments in existing, litigation, claims or assessments; changes to, or new, accounting standards; foreign currency exchange rate fluctuations; and the integration of acquired businesses.  The Company does not undertake any obligation to update its forward-looking statements.

INVESTOR CONTACT:

Janet M. Barth(908) 613-5820

BED BATH & BEYOND INC. AND SUBSIDIARIES

Consolidated Statements of Earnings

(in thousands, except per share data)

(unaudited)

	Three Months Ended
	June 2, 2018		May 27, 2017
Net sales	$	2,753,667	$	2,742,141
Cost of sales	1,788,819		1,742,026
Gross profit	964,848		1,000,115
Selling, general and administrative expenses	883,619		853,104
Operating profit	81,229		147,011
Interest expense, net	16,732		16,580
Earnings before provision for income taxes	64,497		130,431
Provision for income taxes	20,921		55,148
Net earnings	$	43,576	$	75,283
Net earnings per share - Basic	$	0.32	$	0.53
Net earnings per share - Diluted	$	0.32	$	0.53
Weighted average shares outstanding - Basic	135,987		141,331
Weighted average shares outstanding - Diluted	136,601		142,141
Dividends declared per share	$	0.160	$	0.150

BED BATH & BEYOND INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands, except per share data)

(unaudited)

	June 2, 2018			May 27, 2017
Assets
Current assets:
Cash and cash equivalents	$	678,646		$	469,320
Short term investment securities	148,313			—
Merchandise inventories	2,646,263			2,962,936
Prepaid expenses and other current assets	483,159			217,917
Total current assets	3,956,381			3,650,173
Long term investment securities	19,957			96,121
Property and equipment, net	1,893,230			1,817,594
Goodwill	716,283			707,643
Other assets	427,895			604,270
	$	7,013,746		$	6,875,801
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	1,082,943		$	1,178,811
Accrued expenses and other current liabilities	716,069			509,501
Merchandise credit and gift card liabilities	329,055			319,496
Current income taxes payable	—			117,211
Total current liabilities	2,128,067			2,125,019
Deferred rent and other liabilities	431,799			520,040
Income taxes payable	57,507			66,431
Long term debt	1,492,194			1,491,719
Total liabilities	4,109,567			4,203,209
Shareholders’ equity:
Preferred stock - $0.01 par value; authorized - 1,000 shares; no shares issued or outstanding	—			—
Common stock - $0.01 par value; authorized - 900,000 shares; issued 342,642 and 341,276, respectively; outstanding 140,131 and 144,730 shares, respectively	3,426			3,413
Additional paid-in capital	2,082,238			2,006,939
Retained earnings	11,360,572			11,057,826
Treasury stock, at cost; 202,511 and 196,546 shares, respectively	(10,490,082		)	(10,342,863		)
Accumulated other comprehensive loss	(51,975		)	(52,723		)
Total shareholders’ equity	2,904,179			2,672,592
	$	7,013,746		$	6,875,801

BED BATH & BEYOND INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(in thousands, unaudited)

	Three Months Ended
	June 2, 2018			May 27, 2017
Cash Flows from Operating Activities:
Net earnings	$	43,576		$	75,283
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	79,578			74,912
Stock-based compensation	23,572			21,490
Deferred income taxes	(3,548		)	(6,571		)
Other	(1,109		)	555
Increase (decrease) in assets, net of effect of acquisitions:
Merchandise inventories	82,252			(59,916		)
Trading investment securities	(2,069		)	(6,256		)
Other current assets	104,954			(20,146		)
Other assets	(482		)	(631		)
Decrease (increase) in liabilities, net of effect of acquisitions:
Accounts payable	(78,717		)	24,567
Accrued expenses and other current liabilities	(5,401		)	25,591
Merchandise credit and gift card liabilities	5,553			10,172
Income taxes payable	(3,767		)	55,805
Deferred rent and other liabilities	602			9,779
Net cash provided by operating activities	244,994			204,634
Cash Flows from Investing Activities:
Purchase of held-to-maturity investment securities	(5,625		)	—
Redemption of held-to-maturity investment securities	238,125			—
Capital expenditures	(97,813		)	(80,760		)
Payment for acquisition, net of cash acquired	—			(4,344		)
Net cash provided by (used in) investing activities	134,687			(85,104		)
Cash Flows from Financing Activities:
Proceeds from exercise of stock options	—			10,161
Payment of dividends	(21,414		)	(18,161		)
Repurchase of common stock, including fees	(22,110		)	(127,324		)
Net cash used in financing activities	(43,524		)	(135,324		)
Effect of exchange rate changes on cash and cash equivalents	(3,651		)	(3,215		)
Net increase (decrease) in cash and cash equivalents	332,506			(19,009		)
Cash and cash equivalents:
Beginning of period	346,140			488,329
End of period	$	678,646		$	469,320

EX-99.2

Exhibit 99.2

Shop Designers Stories Fiscal 2018 First Quarter Earnings Call June 27, 2018

Forward Looking Statements This presentation may contain forward-looking statements. Many of these forward-looking statements can be identified by use of words such as may, will, expect, anticipate, approximate, estimate, assume, continue, model, project, plan, goal, and similar words and phrases. The Company’s actual results and future financial condition may differ materially from those expressed in any such forward-looking statements as a result of many factors. Such factors include, without limitation: general economic conditions including the housing market, a challenging overall macroeconomic environment and related changes in the retailing environment; consumer preferences, spending habits and adoption of new technologies; demographics and other macroeconomic factors that may impact the level of spending for the types of merchandise sold by the Company; civil disturbances and terrorist acts; unusual weather patterns and natural disasters; competition from existing and potential competitors across all channels; pricing pressures; liquidity; the ability to achieve anticipated cost savings, and to not exceed anticipated costs, associated with organizational changes; the ability to attract and retain qualified employees in all areas of the organization; the cost of labor, merchandise and other costs and expenses; potential supply chain disruption due to trade restrictions, political instability, labor disturbances, product recalls, financial or operational instability of suppliers or carriers, and other items; the ability to find suitable locations at acceptable occupancy costs and other terms to support the Company’s plans for new stores; the ability to establish and profitably maintain the appropriate mix of digital and physical presence in the markets it serves; the ability to assess and implement technologies in support of the Company’s development of its omnichannel capabilities; uncertainty in financial markets; volatility in the price of the Company’s common stock and its effect, and the effect of other factors, on the Company’s capital allocation strategy; disruptions to the Company’s information technology systems including but not limited to security breaches of systems protecting consumer and employee information; reputational risk arising from challenges to the Company’s or a third party supplier’s compliance with various laws, regulations or standards, including those related to labor, health, safety, privacy or the environment; reputational risk arising from third-party merchandise or service vendor performance in direct home delivery or assembly of product for customers; changes to statutory, regulatory and legal requirements, including without limitation proposed changes affecting international trade; changes to, or new, tax laws or interpretation of existing tax laws; new, or developments in existing, litigation, claims or assessments; changes to, or new, accounting standards; foreign currency exchange rate fluctuations; and the integration of acquired businesses. The Company does not undertake any obligation to update its forward-looking statements. 2

Our Mission To be trusted by our customers as the expert for the home and heart-felt life events by continuing to build and deliver a strong foundation of differentiated products, services, and solutions while driving operational excellence. Present a meaningfully differentiated and complete product assortment for the home, of the right quality, and at the right price Provide services and solutions that enhance the usage and enjoyment of our offerings To deliver a convenient, engaging, and inspiring shopping experience that is intelligently personalized over time To drive change across the organization in order to further establish operational excellence and create future growth Strategic Focus Serving Customers Across Heart-Felt Life Events 3

Our Vision for 2020 In Fiscal 2018: Grow comp sales In Fiscal 2018 and 2019: Moderate the declines in operating profit and net earnings per diluted share By Fiscal 2020: Grow net earnings per diluted share We remain on track with our annual and 3-year goals, while we continue to evolve our foundational structure 4

Q1 2018 Summary Remain on track with fiscal 2018 modeling assumptions and 3-year financial goals Sales of approximately $2.8 billion, up 0.4% versus Q1 2017 Continued strong growth in customer-facing digital channels Diluted EPS of $0.32 per share Retail inventory reduction of approximately $300 million (at cost) vs. Q1 2017 Continued growth of cash and investments, even after funding our operations, capital expenditures, dividends and share repurchases Declared quarterly dividend of $.16/share, payable on Oct. 16, 2018 to shareholders of record at the close of business on Sept. 14, 2018 5

Strategic Investments Positioning Our Company for Long-Term Success Assortment Experiences Services Operational Excellence Our Mission: To be trusted as the expert for the home and heart-felt life events. 4 Broad Areas of Focus 6

Key Focus Areas: Expansive Online Assortment, Differentiated Over Time Quality, Value & Competitive Pricing Convenient & Easy Shopping / Delivery Experience Increase Customer Awareness Supported by an Agile, Cross-Functional Team Decorative Furnishings (DF) Results (1Q 18 vs. 1Q 17): Strong DF sales growth (BBB/bbB – US/Canada) Significantly higher AOV for DF than overall AOV for BBB and bbB websites (BBB/bbB – US only) Accelerate Growth of Decorative Furnishings The Trusted Expert for Whole Home Decorating Assortment 7

Progress Update: Added >78,000 Decorative Furnishings SKUs* (FY 17); added 24,000 more in 1Q 2018 Increasing the productivity of the assortment using web performance data to edit existing assortment and identify opportunity Developing proprietary brands for launch in FY2019 Accelerate Growth of Decorative Furnishings Expansive Online Assortment Assortment * Online expansion for bedbathandbeyond.com (U.S.) 8

Accelerate Growth of Decorative Furnishings In-Store Pilot (Spring 2018) Key Focus Areas of Pilot: Raise awareness Build a scalable framework to: show furniture in our stores and support the associate and customer through their shopping journey Progress Update: Vignettes and featured item displays rolled out in 78 BBB stores Associate training conducted; testing tablets to better assist customers to ‘find more beyond the store’ Conducting customer awareness survey (pre and post launch) Early Results: Decorative Furnishings orders placed in-store and shipped directly to the customer grew 10.4% over the last 4 weeks vs. 3.6% in stores not participating in pilot Assortment 9

Key Focus Areas: Leveraging Real Estate Portfolio: Numerous near-term renewals provide opportunity to update existing selected stores Evolving and/or New Assortment: to increase shopping trips, transactions and transaction value Scarcity product: Seasonal, Decorative Furnishings Treasure Hunt, and Deep Value Commodity product: Food & Beverage, and Health & Beauty Care Making Stores More Efficient Next Generation Store Optimize Store Productivity Experiences 10

Progress Update: 4 remodels completed Plymouth Meeting, PA (March) Mount Vernon, NY (April) Summerlin, NV (May) Lubbock, TX (June) Iterate quickly after each remodel for continuous improvement and enhance merchandising and customer experience Plan to remodel another 15 stores by late Fall 2018 Another 20 stores to be remodeled by end of Spring 2019 Next Generation Store Store Remodels Underway Experiences 11

Early Results: Strong transaction growth in these stores Significant growth in transactions that include new and/or evolving merchandise assortment Core Department: Space reduced by ~10% in these stores; Sales outperforming rest of BBB stores Next Generation Store Favorable Customer Response Experiences 12

Inventory Optimization Inventory Initiatives Driving Benefits Operational Excellence Retail inventories (at cost) reduced ~$170 million Retail inventories (at cost) reduced ~$300 million 13

Marketing Personalization Driving Incremental Revenue & Optimizing Customer Experience Key Focus Area: Tailor timing, content and design of messaging to each customer, depending on their attributes, context, and behaviors Supported by an agile, cross-functional team Experiences 14 Progress Update: Launched first “Personalization Lab” in April 2018 Launched >20 email tests in <2 months Speed & throughput of our personalized marketing capabilities have grown 10X

Marketing Personalization Driving Incremental Revenue & Optimizing Customer Experience Experiences 15 Early Results: Customer engagement has grown ~15-20% on all marketing personalization tests Identified incremental revenue from marketing personalization initiative Identified enhanced technology tools to support marketing personalization – to be implemented over the next 12-18 months

Q1 2018 Financials 16

Q1 2018 P&L Summary (amounts in millions, except comp %, and per share data) 17 June 2, 2018 % of Sales May 27, 2017 % of Sales Comp Sales % (a) (0.6) (2.0) Net Sales $2,754 100.0 $2,742 100.0 Gross Profit 965 35.0 1,000 36.5 (1.5) (b) SG&A Expenses 884 32.1 853 31.1 (1.0) (c) Operating Profit 81 2.9 147 5.4 (2.5) Net Earnings 44 1.6 75 2.7 (1.1) EPS - Diluted $0.32 $0.53 WAS - Diluted 137 142 (c) Due to increases in payroll and payroll-related expenses, including severance costs incurred during the quarter, technology-related expenses, including related depreciation, and management consulting expenses (b) Due to increases in coupon expense and net direct-to-customer shipping expense Change Three Months Ended comp sales % compares the periods of March 4, 2018 - June 2, 2018 to March 5, 2017 - June 3, 2017. (a) Comp sales are determined using the same calendar weeks as fiscal 2018; therefore the Q1

Q1 2018 Balance Sheet & Capital Allocation Highlights Cash Position Continued growth of cash and investments Cash and investments of $847 million at end of quarter, increase of approximately $281 million from Q1 2017 Inventory Retail inventory reduction (at cost) of approximately $300 million at end of Q1 2018 vs. end of Q1 2017 Capital Expenditures Capital expenditures of approximately $98 million in Q1 2018 Approximately 80% related to IT investments Capital Allocation Paid cash dividend of $.15 per diluted share, approximately $21 million Executed share repurchases of $22 million, or 1.2 million shares Declared $.16 dividend per share 18

Fiscal 2018 Modeling Assumptions Consolidated Net Sales Relatively flat to slightly positive Comparable Net Sales Growth in low-single-digit percentage range Strong growth in customer-facing digital channels Gross Margin Deleverage due to continued investment in customer value proposition and ongoing shift to digital channels SG&A Deleverage due to continuing investments in Company transformation Operating Margin Deleverage less than FY17 Depreciation Approximately $315 to $325 million Tax Rate Range of 26% to 27% Capital Expenditures Approximately $375 to $425 million Diluted EPS Low to mid $2.00 range 19