Welcome to Bed Bath & Beyond's First Quarter Fiscal 2016 Earnings Call. All participants will be in a listen-only mode until the Q&A portion of the call. Today’s conference call is being recorded. A rebroadcast of the conference call will be available beginning on Wednesday, June 22, 2016 at 7.30 PM Eastern Time through 7.30 PM Eastern Time on Friday, June 24, 2016. To access the rebroadcast, you may dial 888-843-7419 with the passcode ID of 42747608. At this time, I like to turn the call over to Janet Barth, Vice President, Investor Relations. Please go ahead.

Thank you, Adrianne, and good afternoon everyone. Joining me on our call today are Steven Temares, Bed Bath & Beyond's Chief Executive Officer and member of the Board of Directors; Gene Castagna, Chief Operating Officer; and Sue Lattmann, Chief Financial Officer and Treasurer. Before we begin, I'd like to remind you that this conference call may contain forward-looking statements including statements about or references to 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. The company undertakes no obligation to update or revise any forward-looking statements as events or circumstances may change after this call. Our earnings press release dated June 22, 2016 can be found in the Investor Relations section of our website at www.bedbathandbeyond.com. Here are some highlights from our financial results. First quarter net earnings per diluted share were $0.80. Net sales for the quarter were approximately $2.7 billion, flat to the prior year quarter. Quarterly comparable sales decreased approximately 50 basis points. In addition, our Board of Directors today declared a quarterly dividend of $0.125 per share to be paid on October 18, 2016 to shareholders of record as of September 16, 2016. As a reminder, our first ever dividend was declared on April 6 and will be payable on July 19 to shareholders of record as of June 17. Fiscal 2016 net earnings per diluted share are expected to be within the range we previously described in our year-end press release and conference call. I will now turn the call over to Steve for his perspective on the first quarter and some operational highlights related to our strategic initiatives. In addition, he will share his thoughts regarding our recent purchase of One Kings Lane, an authority in home decor and design that offers a unique collection of select home goods, designer, and vintage items. This transaction was announced on June 14. Later in the call, Sue will discuss our first quarter financial results in more detail and provide an update on our key modeling assumptions for fiscal 2016. After our prepared remarks, we will allow approximately 20 to 25 minutes for questions. I’ll now turn the call over to Steve.

Thank you, Janet. Good afternoon, everyone. Our first quarter results were in line with the directional information we provided back in April on our year-end earnings call. During the first quarter, we made steady progress on our strategic initiatives, which include significant investments in our business to further strengthen our foundation for future growth. At the same time, we remain vigilant in our mission to do more for and with our customers wherever, whenever, and however they wish to interact with us, to provide our customers a seamless experience whether they interact with us in a store, through one of our contact centers, on the desktop, tablet, Smartphone, or through social media, and to be viewed as the expert for the hom including the accompanying life stages that make a house a home such as getting married, having a baby, transitioning into college and moving to a new residence. So as to become the destination for our customers' needs and wants as they express their life interests and travel through their life stages, all through the expanding and differentiated products, services, and solutions we offer. On our last call, I reviewed the transformation that has taken place in our company over the past several years. Today, I will provide a brief update on some of the notable developments since our call in April. In our digital channels, the first of several upgrades planned for fiscal 2016 occurred earlier this month and included refinements to the user experience. As consumer shopping preferences evolve, we remain focused on providing a consistently better and more personalized omnichannel experience. We have made further improvements to both our online wedding and baby registry experiences to simplify the creation and management of these registries. Our mobile websites with these concepts have also been enhanced to improve…

Thanks, Steve. I'll start with a review of our first quarter results. As we stated during our last earnings call in April, we anticipated that the contribution of this year's first quarter net earnings per diluted share to the full-year would be somewhat lighter than in previous years, due in part to holiday shift and advertising changes. Our actual first quarter results were in line with this directional information and included a marginal impact from the shift of Memorial Day from first quarter into second quarter this year. As you probably know, the first quarter typically accounts for the smallest portion of our annual net sales and earnings. So any fixed cost as a percentage of net sales are relatively more pronounced in the first quarter than they would be in any of the other quarters. Also, as we said in last week's press release, the purchase of One Kings Lane had no effect on our first-quarter results, as the transaction occurred after the end of the first quarter. Net sales for the quarter were approximately $2.7 billion, flat with the first quarter of last year, due to an increase in net sales from new stores offset by a decrease in comp sales. Comp sales for the quarter decreased by approximately 50 basis points, attributable to a decrease in the number of transactions, partially offset by an increase in the average transaction amount. Comp sales from our customer facing digital channels continue to grow in excess of 20%, while comp sales from our stores declined in the low single-digit percentage range. Gross margin for the first quarter was approximately 37.4% as compared to approximately 38.1% of net sales in the first quarter of last year. The decrease is primarily due to, in order of magnitude, a decrease in merchandise margins…

Great. Thanks, Sue. Let's move on to the Q&A portion of the call. So that we can get through as many questions as we can, we would appreciate if the participants will limit themselves to one question with one follow-up please. If we are unable to get to your question during the call, I will be available tonight to speak with you. Adrian, we are now ready for questions.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And we have Simeon Gutman from Morgan Stanley in line with a question, please go ahead.

Thanks. Good afternoon. It’s Simeon Gutman. Thanks for doing the call. One – my first question is on the guidance. I think last quarter there was some language that at hitting the – I guess, the regular – the sales range, you would be able to hit the high-end of that guidance range. And then you said if the comp is higher, 1 to 2, you can probably exceed it. It sounds like you took down the sales range a little bit and then you used the word comfortably. I'm trying to gauge what comfortably is, if that still means at the high-end? And then, if so, I guess, despite the lower sales outlook, what is changing, if anything, other than maybe you built enough cushion into the outlook that enables you to still be in that range? Thanks.

Hi Simeon, this is Sue. Thanks for the question. Taking into consideration One Kings Lane and our current business trends as well as our actual results, we're comfortably within the range of $4.50 to just over $5. We did change our comps for the year to be relatively flat for a 1% increase, given those actual results and our current business trends.

Okay. I guess my one follow-up is that if you take out the incremental investments that you called out for the first quarter, can you tell us how the core margins of the business performed relative to plan?

I'm sorry. The incremental investments, what do you mean by them? Simeon, it’s Gene.

Hi, Gene. So if you take out the additional investments, some of the advertising, some of the infrastructure investments and we look at how the core business performed, the margins of the business, did those perform relative to plan?

I mean we – I guess we could discuss it in between gross margin and SG&A. I don’t know if the investments you are talking about would affect the gross margins. Sue, I guess you could summarize what – where we look for the quarter.

Sure. What I would say is what we modeled as assumptions back April 6, we came in line with those assumptions for the first quarter. We said that we would be somewhat lighter from an earnings perspective, and we were. The primary drivers for the gross margin was a decrease in merchandise margin, increases in coupon expense, and as you called, to a lesser extent, the direct to customer shipping expense. For the SG&A, we discussed the fact that we increased payroll-related expenses, technology expenses including the depreciation and, as you mentioned, an increase to a lesser extent in advertising expense. And that was due in part to the growth in our digital advertising. Payroll and technology were called out. We continued to expect wage pressure. We are not immune to that. It’s affecting the broader workforce, and that's where we are.

Hi, Simeon, it’s Steve. How are you? Just in general, I'm not sure if I got the gist of the question. But basically we came within or we were in line with what our expectations were for the quarter. So I'm not sure if that answers your question or not.

It does, yes. Thank you.

And our next question comes from Seth Basham from Wedbush. Please go ahead.

Thanks a lot and thanks for taking my question. Can you give us a little bit more insight into plans for One Kings Lane, what prompted you to make this acquisition and how you see it fitting into the big picture of Bed Bath & Beyond over the next few years? Do you expect it to be synergistic in any specific ways?

Listen, that was like five questions, but I'll try to address them, Seth. Listen, we think that it’s – first of all, getting to know the people there. We're blown away by how good they are and how impressive they are. When we looked at the site and we filed the site all these years, we think that they communicate to the customer tremendously well. And again, when we talk about doing more with our customer and being the expert for the home, I mean again in so many respects they are there. Their customer, who is passionate about the home, really goes to that site and really looks at it multiple times a day, the type of thing that you sit doing on your lap with your iPad at the end of the night before you go to sleep and you play with it. So they do a wonderful job. The plan is, one is basically believe that there could be a very profitable model so as to provide those resources and support necessary to grow their business, and then as we said in the last call, we intend to really grow our furniture and home furnishings business. And they really have the ability to serve as a cornerstone for us doing that. They are giving us really immediate credibility as we grow this business. Again, for them, really we want to give them the opportunity to even further define their point of view to really be able to create more differentiated merchandise, to really to strike the chord with that customer. And it really will be sort of a shining star in our umbrella of brands. And that's how we view it. Then you look at other things that it could do for us. For example, we talk about being more experiential and you look at the design services that they provide, the studio experience that they provide to their customers in California or in San Fran and New York, those are things that we think can have legs also going forward and might even have applications in our stores at some point. And then you take a look at the ability to register in certain respects either towards a large gift, offer a gift card, offer a specific furniture that could be made available on a continuity basis, so what it can mean for our registry business. So these are all ways that we look at this business and it really excites us.

That's helpful. As a follow-up. As you’ve started to already shift the assortment online to bigger ticket items like mattresses, jewelry, et cetera, I would have thought that would help boost your online sales growth, but we’ve seen some deceleration. Can you give us some insight into why that's the case?

Again – listen, I’m not sure of all the nuances, but what I was – interesting on one of Simeon's question, when we say we are comfortably versus what’s high and we have no intention to confuse the issue. So that's interesting. But I guess this time we would talk about 25% and I guess we are somewhere along those lines. We guess the language used is an exit to 20%. But again, the first quarter is a relatively – it's the smallest of all quarters for us. And again, directionally nothing has changed. Our online digital business is growing extremely well and the same on the other end of the coin. We are seeing pressure placed upon the bricks-and-mortar aspect of our business by those -- the lack of foot traffic that we would like to see or that I think that it’s being experienced across the board in bricks and mortar.

Very good. Thank you so much.

Thank you.

And our next question comes from Brad Thomas from KeyBanc Capital Markets. Please go ahead.

Thank you. Good afternoon. And thank you so much for taking the questions here. My question was around the pricing strategy and I was hoping you could just comment on your current analytics and systems capabilities and how able you are to track prices and adjust to the competition around you in terms of daily or hourly or real-time changes? And then more broadly, what is your pricing goal and strategy today? Obviously, you all have a price match guarantee in your stores online. But when you try to price things online and pricing your store and price shipping, what are your goals today as a company? Thank you.

Thanks Brad. Our goal is to be at the right price, obviously, for our customer. So that's what remains to be determined as we have price transparency out there. And again, I think that we are starting to see some anniversarying of that price transparency that everybody seems to be aware of the fact and more and more retailers seem to be selling at the same price. But again, really what it comes down to two great extent being at the right price and not being involved in a price war. And that means having differentiated products. So when we look at World Market and we looked at – we look at what One Kings Lane can do in developing differentiated product, when we look at Christmas Tree and what they've done with differentiated product and our growth product development group at Bed Bath, and then being that differentiated product is so important to us so that it doesn't become just about the price. But again, we can't be at a different price than other people are at, so we have to be at the right price. And when it comes to how do we price, it's an interesting question. It's a good question because we have a growing group in our analytics. We look at the pricing. We surf the web or whatever you call it, every day, multiple times a day or all throughout the day and our buyers and planners get reporting each and every day , by item, by categories, by vendor and prices are adjusted on a daily basis, but we are omnichannel. So our ability – and we are doing dynamic pricing today. Again, at its infancy for us but we are doing it. But again it's a little bit more difficult for us when it comes to items that you can find both online and in-store because we don't have the capability or the desire, really, to change prices daily in our stores. So again, so whether the product is direct from vendor or a differentiated product, it’s not a concern. We could be more aggressive, but for the products that you can find in-store and online, to the extent that it’s changed online and have to follow suit in-store, it's more difficult for us to do that. But, again, being at the right price is essential to us.

Great, thank you so much, Steve.

Thanks Brad.

And our next question comes from David Magee from SunTrust. Please go ahead.

Hi, everybody. Just a couple of questions. One is, I'm curious about what percent of your customers that order online actually pick the product up in the store and is that a metric that you see potential improvement with, number one?

Sure. That is a service that we offer, to reserve online pickup in-store and it’s growing. It's something that we find that our customers are enjoying. It is a growing service that we offer.

I don't think we break out the number separately, but it is – since launch, it has been very popular, and as Sue said, it has been growing.

And again, one thing we always say, wherever, whenever and however, so whatever it is today, it might grow tomorrow and it might shrink three years from now, or three months from now. So again, it's what we have to be, where the customer want us to be. And again, it depends upon what categories and which businesses we are talking about, which concepts.

Thanks, Steven. Are you all shipping from the store?

Yeah, we have for years. And again, it’s a growing capability. We’ve had regional fulfillment stores, but each and every store has the ability to ship from store and we do.

If I could sneak one more, as you increase the home décor…

You're the first one to break the rule, David. I was wondering who that would be, so let's see who had money on David.

As you increase the home decor business, what categories might be shrinking in response, in your stores?

Again, it's interesting you asked that because, for example, you don't necessarily – home decor can grow online, it doesn't necessarily have to shrink space in stores. What you will see in our and That! store in Kennesaw is that we are significantly growing our assortment of home decor and better home decor than we carried historically at the Christmas Tree Shops. So again, so when you look at it, we are not intending to shrink the availability of our home decor or the visibility of our home décor products to our customers. Our intention is to increase it.

Great. Thank you and good luck.

And our next question comes from Seth Sigman from Credit Suisse. Please go ahead.

Thanks a lot. Good afternoon, guys. Just one follow-up question on the comps outlook. Just want to make sure I have this right. So it sounds like the first quarter was in line, but you are taking comps guidance down for the year to reflect the Q1 and current trend. So does that imply something softer in the second quarter? If so, is there any more color you can add to what you're seeing, just to kind of help us with that? Thanks.

Sure. We did have a 1% to 2% comp for the year. Obviously, as we had mentioned last quarter that our first quarter would be somewhat lighter than that and so what we've seen through our actual results as well as current business trends, we're now projecting a 0% to 1%.

Okay, got it. And then just on free shipping, we noticed a number of tests throughout the quarter including reduction in the threshold from 49 to 25 for much of the quarter and it now looks like you are running at 29, can you give us a sense of how that impacted margins in the quarter and any color on what you are observing in terms of elasticity as you post that offer throughout the quarter?

So we continue to look at different free shipping threshold. We want to learn how the change effective purchasing behavior and other variables. We want to optimize profitability. We also have to consider what's going on in the competition. Free shipping is important to customers and it's part of our value proposition, but ultimately the goal is to retain customers, and so we do that and looking at optimizing profitability at the same time.

Just to clarify, is the 29 that we are seeing right now, is that the new norm or is they still testing, just trying to understand what would be embedded in the guidance.

It's not the new norm. It's something that we're looking at for now. And as I said earlier, we are considering to manage and look at different thresholds that we are considering.

Yeah, and Seth, again, so whether BABY at – I don't know if BABY at 99 – BABY at today. So baby will be a different number, and again even in different parts of the country, you might see different tests going on at different times of the year. These are all things that are part of what we are trying to learn. So again, there's no finish line with this. As Sue said, what other people do on customers' expectations play a significant role. So even if we saw there was elasticity, today you might not see it down the road. So again, this is something that I think constantly evolves. And again, what we try to do is we trying to build out a model that assumes the case of same-day delivery for free. I mean we are not saying that it's going to going to be there or is going to get there, but we've got to be anticipating that they could get there and how do we build out the most efficient model we can from a logistics standpoint to get product to our customers.

Okay. Thank you. Appreciate you taking the questions.

And our next question comes from Michael Lester from UBS. Please go ahead.

Good evening. Thanks a lot for taking my question. Steve, how do you think about the length of time for you to execute the company’s transformation? When do you expect gross profit dollars to stabilize and if it's not possible to know that, what key performance measures should shareholders use to gauge the progress of the strategic initiative?

Well, sure. I'm not sure if you want to direct it to Steven or not. I thought you did. But I'll jump in first. The pressure is on gross margin, they remain in all of retail. We don't know, as you mentioned, when the margin pressure will stabilize, but there is many factors that go into it. There's price transparency, free shipping thresholds like we just discussed, merchandise margins. But we remain and anticipate to be competitive in all of those areas. So we're constantly evaluating each of them for optimization. As we said earlier, for 2015, we are planning de-leverage for the year, even though that's the case, we are modeling that de-leverage to be less than that of 2015. So we continue to try to look at it and as we have more details on it, we'll continue to report that out to you.

Michael, and again…

Okay.

I’m sorry. Do you want to follow up with that?

No, please, go ahead.

I was just going to say just to support what Sue was saying is that, you know that our online, our digital business is growing in a healthy fashion. We know that our gross margin still remain some of the strongest in retail, despite the declines. We do know that we do have a competitive set, that people today to you make decisions not based on short-term profitability, and they run their businesses well and they do good – and they are servicing the customer well. So these are things that we have to respond to as well. So it's hard to – and I know everybody wants to do a model and they want to say at what point in time will margins turnaround and what is going to look like, but again when you talk about how we are running the business, things we are investing in, is that – you look at a number of years ago and the people just a short time ago when you had all the big boxes, you had Borders Books, you had Sports Authority, you had Circuit City, and all these industry leaders who are no longer around today because [indiscernible]. You go back and you say that, what investments do you make and at what point in time and when did they pay off. Well, we just know in part that we'd be so much better off or we are so much better off with investments we've made for where the company is today and if we didn't make these investments. So again, we could have chased short-term profitability or short-term comps by buying comps, there's a lot of things that we could be doing, but again, as we’ve always said and you know as well, that we are building…

That all makes a ton of sense, Steven. And I think the market recognizes that Bed Bath & Beyond is a great company. I guess where there is some confusion and what's less clear is – and there's recognition that there's a transformation going on. It's just hard to measure the progress, especially in light of sales kind of decelerating, profits decelerating, so what measures, what benchmarks should the market as whole you could do?

Again, I think that when you look at our growth, well, first of all, I think exactly we always said about going to the store. First of all, go to our website, and how much better it is. Go to the product offering, look at all we’ve added to our assortment. Look at all the differentiated product today, look at the things that we offer, the Wamsutta, the [indiscernible], go to the customer experience, look at our broader registry, our [indiscernible]. We’d always start with what customers experience and better today and we are significantly better. And yes, in the areas the customer is migrating to a digital world. And so you look at the growth of our digital business, and our digital business is very healthy. And we try to reach in every past couple of years, giving you some guidance for the year and what to expect. And I think for each of those years, we are pretty much have accomplished what we told you were going to accomplish, if you look back at what we said at the beginning of the year and where we ended the year. So, again, I know that that’s those are sort of soft answers for you. But listen, the onus is on us to show you over time that where we are going to be not only – we're going to be one of the few people that is going to be selling almost everything to everybody over time and that we are going to be extremely healthy and successful. And again if you look any financial metric today relative to anybody in retail, although that, yes, the numbers have come down, that we compare very favorably to just about any competitive set that you can look at. So, again, so I think your critique is fair and accurate and the criticisms are fair and the onus is on us to show over time. But again, there's nothing that you can look at or no experience I think the customer has today that isn’t better than it was a few years ago.

That's very helpful. If I could just ask a clarification question, for Sue, so it sounds like you ratcheted down your comp expectations. Your e-com business is still growing 20%, so does that mean you’ve really ratcheted down your expectation for the performance of the stores?

Well, we’ve seen softer comps in stores that’s been our trend. So, we considered both the growth, as we discussed before, in the digital channels and also some of the softer comps we’ve been seeing in stores. So that's all baked in.

Got it.

And then to get my last two cents in, it's an interesting thing, again, is that we would just say 1% to 2% to 0% to 1%. That 1% reduction is that everybody - to us, we are trying to run a better business. And the whole idea that we should get so caught up in a 1% difference in the comp or something like that is kind of crazy to us, but we recognize it's very important to you and the jobs you guys do. But again, we are not running the business any better or worse if our comp is a 1% or not. So, I would just want to give my two cents on that.

That's fair. And I think we all want to see you guys succeed. So, best of luck.

Thank you.

Thank you.

The next question comes from Christopher Horver from JPMorgan. Please go ahead.

Michael Lester definitely broke the rule there on the number of questions. So, I'm just glad I got to get on.

Yes, you just became our favorite analyst.

You mentioned that CapEx is peaking this year, trying to get a gage on like, and it sort of comes back down to normalized levels over the next few years, can you help us out with that? Can you quantify the capital cost of some of the big projects like the POS and the new DC? And do you think as you look out to 2017 or next year and the year out, do you have other wholesale new DC going up or wholesale systems replacement in your strategic plan?

So as we had said earlier, we do anticipate that the 2017 CapEx spend will be lower than that of 2016. We do see 2016 to be more of a peak for us. You call that a few of the items that are the big ticket items for this year. It is the distribution facility, it is our continuing development of POS and some of the equipment and software that we're continuing to put in our stores. So those are the bigger pieces for 2016. And as we get closer to the next year, we will refine our capital spend and its timing. We’ve been making significant investments also from a digital perspective. And some of those changes in evolving environment, and so sometimes you can assume that what you're planning on for 2017 and beyond you need to tweak and change. So as we get closer to next year we will refine that for you.

And as we do look into the future, past this year, there will be additional investments in distribution and systems. It's just, we just happen to have a perfect storm this year where we have the point of sale and distribution center and some of the bigger projects happening all at the same time. Over the next few years we will have them, but we are not anticipating that they will all be occurring within one year.

Okay. So if you look at from the past four years, you have been more in that low $330 million-ish kind of level. Is that a normal? I mean, because investments in e-commerce and systems never truly end, but is that more of a - as you look at what normalized capital spending is?

Yes, I mean we are still a bit away from 2017 and we have a general plan, but we will get …

Yes, we will have to refine that. As we get closer, as we said, you're right, that has been historical trend and this is more of a peak. But like we said, when we get closer to 2017 we will be able to share more with you than.

Okay. And then in the first quarter you talked about the wage impact being $0.23 for the year and I think the technology cents impacting $0.17, does that still hold and do you expect those to be felt relatively evenly over the quarters of the year?

We did call out those items, you are correct, last quarter. And we do continue to expect wage pressure. We are not immune to it and we do have those technology expenses including the depreciation. So, they will run the course through the year. That's what we’re predicting.

Okay, thanks very much.

Sure.

And our next question comes from Kate McShane from Citi. Please go ahead.

Hi. Thank you for taking my question. My first question was just about the consumer environment, just because we are well into June here, just how you feel about the consumer environment currently, how maybe it’s evolved from the last time we’ve heard from you.

If you were sitting across the table from me, I would say, well, what are you hearing, because I think that you are out there talking to so many people. So I'd be curious what are you hearing.

Well, I think everyone feels pretty good about the macro data points, but I think we've heard from quite a few companies there have been some challenges out there and some challenging comps. So, I think we're just trying to reconcile exactly what's happening with the consumer? Is it indeed people saving more or paying down debt, or is there share of wallet, or is it something more? Just curious about your view in that context.

Again, listen, we're not economists. So, we can give our perspective. It's probably not worth anything. But again, my personal view, and it would just be my personal view, is that there hasn’t been - there's no great catalyst for additional spending. It's not like the economy has a huge wind at its back. I mean, every time they want to raise interest rates that doesn't happen. Again, I think the notion that there's something different out there that's happening - I think maybe if you look back, obviously, if you look back from 2008 and 2009, if you look back over the past seven years, you have seen maybe some very gradual incremental improvement to the economy. But again, I don't think that it's anything to write home about. And I don't think there's, again, any - absent what might happen in an election year or something, but no great catalyst that's going to change that, short term. But again, that's just a personal opinion.

Okay. And if I could ask my second question around the credit card agreement that you guys signed earlier in the month, do you have any additional details about that agreement and how maybe you are thinking of positioning the card along with the loyalty program or using junction with the loyalty program of any kind?

Yes, so you are right. We did announce a partnership regarding a new co-branded credit card. It's considered in our modeling assumptions. It's at this point more have a significant impact in the short term, and we will assess the benefits over time.

I don't think it's launching with anything other than the rewards that are associated with the card. So you earned a percent back for shopping within all of our concepts and then percentages for either gas or restaurants and outside purchases, but it's not going to be tied into a greater loyalty program upon launch.

Okay, thank you.

And our next question comes from Dan Binder from Jefferies. Please go ahead.

Great, thanks. I promise not to ask a comp question. First on the Ellen Bedding brand or launch, obviously exclusive, it's interesting. And on that I was curious if you could discuss a little bit more where your private label and exclusive mix is and if there's an internal priority to increase this meaningfully so that you can distinguish the Bed Bath & Beyond format in the broader market.

Hi Dan, thanks. First of all, to get to the end of the question, yes, there is. There's a tremendous focus. We say that we wake up every day and go to bed every night saying differentiation. But we have to have differentiated product. So, like we said, it is that world market that you will see significantly differentiated product. You see a Christmas Tree. Again, the objective with One Kings Lane is really to free them up to allow them to really express their point of view. And at Bed Bath, yes, we've been working very hard to grow the differentiated product at Bed Bath as well and at buybuy BABY. So, again, so that is very much part of our mission. When you say, I'm not sure if you asked if there is a goal or an objective or where we want to be, but again the customer will tell us because we don't pick a number or percentage of our assortment. We really look at a category by category, what's the opportunity, what can we be bringing to market, making – that makes us different, you know that has great value, that really add something to the customer's choices out there. And then we look at other things like can you really make it? I mean, obviously, things with a plug or a mold are much more difficult to really work on differentiated product, but again, what's the markdown exposure, so we know how much we have to make of it. So, all these things have taken into account, but the objective is really to be great merchants. And to be great merchants, we should be really a leader and bringing differentiated product to market. So is the objective, an objective, every part of the organization, and it's been growing in every part of the organization. You can look at Harmon Face Values, for example, and you look at all the private label product that we are bringing to market. So, again very, very, very critical for us.

And then my follow-up question, you mentioned during the call or highlighted that One Kings Lane has a highly curated assortment, but the Bed Bath which I realize a different concept, in the marketplace it looks like it's moving towards the style, more things for more people and I was just wondering, if there is an internal view you can share with us on how far you take that assortment and still remain relevant.

I'm not sure, when you say you how far, who's the you and when you say, who’s - to remain relevant.

Well, in other words, if I go online and I look at your progress over time, you’ve added a lot more items it seems like you want to offer more things to more people. So, what I am trying to understand is how far do you take that without losing the customer on two broad and assortment. In other words curated versus [indiscernible].

Right. That’s a great question. We think and we believe we can accomplish both. We think that it is very important that we move our brand, the Bed Bath brand to be viewed more as the expert for the home, not just about items. So that how we show things, how we market ourselves, how we communicate with our customer, that we really believe that we have to do a better job. And we think One Kings Lane does a wonderful job of that. So again, we do believe we have to move down the continuum in that way. But at the same time, when we add more product, today because of our analytics and target marketing and the ability to serve up to a customer something, know where the customer came from online, where they are going to, what their interests are, what they purchased from us, to give them a view that really speaks to that customer, so they don't have to be bothered with. If they will have to [indiscernible] because that's what they see our site for, and that's what they see our assortments, so we don't have to show them a chicken coop or a snowblower. But for the person who might want to be looking for a chicken coop or a snowblower that we have it for them. So we think that by being smart that we can do both, that we can extend our offering and, to our customers, target them better to speak to them for their interests and their life stages.

Great, thanks.

And this will end our question and answer session.

Well thank you for joining us on the call today and for participating in our inaugural Q&A. We welcome your feedback. And as with everything we do, we strive to get better every day. We appreciate your interest in Bed Bath & Beyond and look forward to speaking with you again when we report our second quarter results in September. Have a good night.

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating and you may now disconnect.