Prepared remarks
Hello, everyone. Thank you for joining us, and welcome to the Q1 2026 Bed Bath & Beyond, Inc. Earnings Conference Call. The operator provided instructions and will now hand the conference over to Melissa Smith, General Counsel and Corporate Secretary. Melissa, please go ahead.
Thank you, operator. Good afternoon, and welcome to Bed Bath & Beyond, Inc.'s First Quarter 2026 Earnings Conference Call. Joining me on the call today are Executive Chairman and Chief Executive Officer, Marcus Lemonis; President, Amy Sullivan; Chief Financial Officer, Adrianne Lee; and Chief Operating Officer, Lisa Foley. Today's discussion and our responses to your questions reflect management's views as of today, April 27, 2026, and may include forward-looking statements, including, without limitation, statements regarding our future business strategy, goals, financial performance, outlook for the remainder of the quarter or any other period, anticipated growth, stock price, profitability, macroeconomic conditions, the value of any of our brands and investments, relationships with third parties and agreements we are entering into with them, margin improvement, expense reduction, marketing efficiencies, conversion, customer experience, changes to brands or websites, product offerings, the merger agreement with The Container Store, blockchain and tokenization efforts and strategies and the 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, 2025, and our Form 10-Q for the quarter ended March 31, 2026 and in our subsequent filings with the SEC. During this call, we will discuss certain non-GAAP financial measures. Our filings with the SEC, including our first 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 2 of that presentation. With that, Marcus, it's all yours.
Thank you so much. I am both honored and privileged to be serving, as of January 1, as the CEO of Bed Bath & Beyond, and I want to thank everybody for joining. Over the last two years, our company has been focused on rebuilding this business, reconstructing the cost structure and lowering the hurdle for profitability with an intense amount of discipline and tough decisions around headcount, legacy technology and the cost of acquiring and retaining our customer base. The objective has been to reposition the company for growth with a definitive point of view of reclaiming profitability, coupled with long-term durability. That work was not about short-term fixes or temporary solutions; it's about making structural changes to how we operate by simplifying the organization, removing layers, materially reducing our cost structure and aligning the team around a clear and consistent set of priorities focused on the homeowner, asset allocation and data. These priorities have not changed. We're focused on driving top-line growth, operating profitability and building something that is unique, durable and meaningful in the home space. In many cases, those decisions were not immediately visible in the numbers. The last couple of years were rough. Declining revenue, while dramatically improving margins and lowering the cost structure, created short-term pressure on the perceived value of our company. Those changes were necessary because without resetting the foundation, there was no path to substantive profitability or to building something with purpose that would last. I knew the changes would take time to show up, but that when they did, they would appear in a way that was durable and repeatable. This is the eighth quarter in a row where the bottom line has improved. Back in January, when I laid out our long-term plan with our Everything Home three-pillar ecosystem, we as a team committed to inflect top-line growth while continuing to reduce costs. That happened. We delivered revenue of approximately $248 million, up 7% year-over-year or 9.4% when you exclude our discontinuing operations from Canada, which marks the first time in 18 to 19 quarters that this business has delivered year-over-year growth. That result occurred concurrently while our operating costs for the quarter reflected the lowest operating cost structure in over 12 years. The growth we are seeing is emerging from a fundamentally reset operating mindset, not incremental spending or short-term activity. That shift becomes clearer as you look beneath the top line. We're acquiring our customers more efficiently. Our own channels are performing better and the engagement we are seeing is higher quality. As the quality of the business improves, the financial performance begins to reflect it. Adjusted EBITDA improved by $5 million year-over-year, and our net loss improved by $24 million. At the same time, the underlying trends are moving in the right direction. We're encouraged by the stability of our active customer file with returning customers and orders delivered improving sequentially. These trends are important because they show that the foundation is not only holding up, but it's beginning to build. Stabilizing the business was never the end goal. It was just my starting point. Everything we are building starts with a simple idea. The home is not a single transaction; it is a life cycle that unfolds over time, providing us with an opportunity to use technology and data to create lifetime value from every single customer relationship. On average, homeowners remain in their home for approximately 11 to 12 years. During that period, they move in, maintain their home, improve it, finance it, experience life events and eventually transition out of it. Historically, those interactions have been fragmented across different companies and disconnected systems. What we are now building is a connected approach. As a reminder, we have organized the business into three pillars that reflect that life cycle. The omnichannel platform is where the relationship begins: yes, the retail business, online and in-store. Our products and financial services platform allows us to participate more deeply in the economic activity tied to the home. And our home services platform, maybe the one I'm most excited about, brings us directly, physically into the home. Earlier this quarter, we completed the first acquisition of our omnichannel pillar with the Kirkland's transaction. We acquired strategic real estate, a product development and sourcing organization second to none and exceptional management. Additionally, we announced the deal to acquire The Container Store. That transaction gives us strategic real estate that is wildly underutilized, a world-class distribution and supply chain system and a home services business with Elfa and Closet Works that will move into Pillar 3, a foundational culture and process that will sit at the hub of Pillar 1. And it comes with exceptional leadership as well. Between those two, we will absorb the capabilities our businesses and our customers want and eliminate all of the redundancies and inefficiencies quickly. Pillar 2, our product and financial services group, is just getting started. And as noted previously, will include property and casualty insurance and home warranties through a nationwide relationship with Brown & Brown Insurance via the Beyond Home Agency. It will also include America's first homeowner credit union in partnership with a leading credit union. Additionally, this pillar will include our credit card program and product warranties. At the center of this pillar is a transaction agreed to in principle that includes a real estate brokerage, home title company and mortgage brokerage. This acquisition would not only create an origination engine for the overall ecosystem, but through technology and AI will allow us to meet and transact with tens of millions of customers without a traditional cost of acquisition. The final pillar and potentially the most exciting is Pillar 3, our home services business. Early this quarter, we announced the intent to acquire F9 Brands, which includes Cabinets To Go, Lumber Liquidators and Southwind Building Products. This acquisition would serve as a platform transaction, bringing unbelievable executive management, warehouse and supply chain capabilities and over $0.5 billion of revenue. Attached to that platform are Elfa and Closet Works Elfa organization systems, which were part of The Container Store transaction. Lastly, we've agreed in principle to acquire a nationwide network of installation and renovation professionals. We believe that's part of building our moat. Together, we believe this creates a high-margin pillar that is defensible against e-commerce competitors and firmly differentiates our company as a service provider regardless of what's happening with the economy. But what is equally important and what I want to be very clear about is how we are building this business. We are not acquiring companies for the sake of scale; we are acquiring capabilities. Many of these businesses and brands that I mentioned have had decades of success but struggled more recently as stand-alone entities. They became burdened with fixed costs, duplicative infrastructure and inefficient cost structures and debt that limited their ability to perform. What we see is something very different. We see capabilities that fill specific roles across our white paper for the entire homeowner life cycle. When you think about the white space of homeownership, each of these businesses represents a critical function that the customer needs over time across those 11 or 12 years. Our strategy is to extract those capabilities, preserve what makes them valuable and eliminate, very strongly eliminate, the layers of cost and inefficiency that came with operating them independently. We preserve what works, we remove what does not work, and we connect everything through a single system. Earlier today, we announced a partnership with Bilt that allows that single operating connectivity system to work for the consumer. When we bring those capabilities together inside of one platform, supported by shared infrastructure and a unified data lake and a single customer identity, they become significantly more powerful together than they ever were apart. This is where our model is fundamentally divergent from traditional consolidation. Most consolidations focus on cost removal. That's part of our model, and we'll continue to eliminate those costs and inefficient operating expenses, including underperforming assets. But the real opportunity is not just cost; the real opportunity is the revenue that we believe we can create by understanding that single sign-on, unified customer layer. Giving each of these brands and each of these businesses an opportunity to cross-promote inside of one big data lake. By connecting these businesses through technology and artificial intelligence, we are building a system that allows us to engage with the same customer across multiple needs over time, dramatically lowering our cost of acquisition while increasing the lifetime value that customer could offer us. Each of these businesses has built and retained its own customer base. By bringing those customer bases together into a single ecosystem, we create a competitive advantage that allows us to grow revenue at a disproportionate rate compared to stand-alone competitors. It's over 100 million unique homeowners. That's not theoretical; it's structural. That is our business model. When you look across the brands we've acquired and are in the process of acquiring, including Overstock, Bed Bath & Beyond, The Container Store, buybuy BABY, Kirkland's, Lumber Liquidators, Elfa, Closet Works and Cabinets To Go, along with our partnerships across insurance, credit, warranties and our planned acquisition in brokerage, mortgage, title, installation and renovation, what we are assembling is not a collection of businesses; it's an ecosystem. Each business contributes capability, each capability strengthens the platform. And together, they create something significantly more valuable than the sum of its parts. Each of these pillars has value independently, but the real value is when they work together. That's what allows us to move from serving a customer once to serving the same customer repeatedly over time. With that, I'll turn the call over to Adrianne.
Thank you, Marcus. I'll now turn to our first quarter financial results. Revenue increased 7% year-over-year in the first quarter and 9% if you exclude the impact of discontinuing our Canadian operations. Average order value improved 6%, driven by our continued focus on improving assortment, driving a healthy mix in living room furniture and patio on the Bed Bath side and an increased sales mix in Overstock. Orders delivered increased by almost 1% in the period. Gross margin landed at 23.9% for the quarter, a decline compared to the same period last year, but still within the bounds of our operating range. We maintained effective discounting tactics, partially offset by lower sales and marketing expense, lapped loyalty points breakage from 1Q '25 and saw benefits from improved carrier costs and exiting underperforming operations. Sales and marketing expense had improved efficiency of 50 basis points as a percent of revenue versus last year. This result was driven by disciplined spend in paid and improved return in owned channels. G&A and tech expense of $36 million decreased by $5 million year-over-year or $8 million if you exclude the impact of one-time costs from acquisition-related activities. All in, adjusted EBITDA came in at a loss of $8 million, a 41% or $5 million improvement versus the first quarter of 2025. Reported adjusted diluted EPS was a loss of $0.25 per share, a $0.17 improvement year-over-year. We ended the quarter with cash, cash equivalents and restricted cash of $163 million. Cash used in operating activities improved year-over-year by more than $39 million or 77%, illustrating stabilization of operations. In the quarter, we invested approximately $26 million in acquisition-related activities. With that, I'll turn the call over to Amy.
Thank you, Adrianne. Our focus on the operating side is simple: translate the strategy into consistent, disciplined execution and ensure that as we scale these capabilities, we do it in a way that is efficient, scalable and built to drive sustainable returns. This work is being led by a strong operating team. Lisa is driving execution across operations and shared services, while Kyla, who we announced this afternoon, is leading our technology transformation. Together, they are building the unified data and intelligence layer that connects the ecosystem and enables how we operate and scale. Today, the majority of our revenue is driven by an asset-light, increasingly productive e-commerce platform. We're pairing that strength with a fleet of more than 320 stores, allowing us to serve the customer across channels while improving productivity and return on assets. As we scale, we are focused on identifying the capabilities that truly drive performance and building around them, while decisively eliminating the inefficiencies that come from operating as fragmented layered businesses. Across the fleet, we are evolving our store formats with clearer roles and stronger economics while taking a disciplined approach to underperforming locations through repositioning, consolidation or exit where returns do not meet our thresholds. That same discipline is driving our merchandising strategy, where we are simplifying assortments, improving margin productivity and strengthening vendor partnerships. Across the organization, we are simplifying how we operate, consolidating systems and teams into a unified platform while removing layers that slow decision-making and limit efficiency. This approach extends to our data and engagement layer. As announced this morning, our partnership with Bilt accelerates a unified customer identity and loyalty foundation across the portfolio, strengthening engagement and lifetime value across all our brands. Customer service is central to this transformation. As we consolidate these functions, we are raising the bar across every single brand and every touch point so the customer experiences consistency regardless of how they engage with us. This is about building an operating model that scales, retaining what drives value and removing what does not. As we continue to integrate new capabilities into the platform, that same approach will apply across the ecosystem, ensuring we preserve what works and remove excess complexity across retail, products and financial services and home services. The result is a simpler, more transparent and more accountable organization with a cost structure designed to drive profitable growth. With that, I'll turn back to Marcus to close.
Thanks, Amy. What you're seeing this quarter is early proof of a model that is beginning to come together. We've stabilized the core business, demonstrated that we can grow revenue while removing costs and established a framework that allows us to build on that foundation with confidence. As we continue to add capabilities into the platform, we expect those capabilities to contribute not only to the efficiency, but to the incremental growth across the system over time. Importantly, this is not a model built solely on cost reduction. While we will continue to remove duplicative and inefficient operating expenses, including underperforming assets, a larger opportunity is the ability to drive revenue through a connected system powered by data, technology and artificial intelligence. You can expect that over the next nine months, as we bring these pillars together and fold in these companies with their capabilities, we will remove an additional $60 million of cost out of the consolidated company while simultaneously strengthening our ability to grow more efficiently. As we approach our shareholder vote on May 14, we are asking for your support as we continue to execute this strategy. For those of you who have been long-term holders of our company, we appreciate your trust. For those who are newer to the story, we believe there is nothing more meaningful than the opportunity ahead. We have work to be done to reset the business. We think we're well on our way. Before we head into the Q&A section, I want to thank Adrianne Lee for the years of service that she has provided this company. She has been by my side as we have taken the current business down to the studs. We've developed a new operating strategy and have seen the fruits of that labor pay off from our team's hard work in the first quarter. Brian LaRose, who came with The Container Store acquisition and has been a very formidable CFO in the omnichannel retail products and services space, will be joining our company. He's joining us here on the call today. But it is important to recognize that we have seen a lot of changes in the last couple of years. And to Adrianne and all the folks that helped us get to this point, we are grateful to the new companies and new executives who are joining our company, like Jason, like Amy, like Brian, we believe that the future is very bright. So we'll move into the formal Q&A section.
Questions and answers
The operator provided instructions. Your first question comes from the line of Steven Forbes from Guggenheim.
Marcus, the upcoming transition of The Container Store locations—curious if you can maybe just speak or give us a sneak peek in the amount of space you plan to merchandise with Bed Bath & Beyond products. What are some of the key merchandising features you're going to be reintroducing to the consumer with these refreshes? And then if you can, how do you expect sales per square foot to change over time as we look out 12, 24 months and so on?
Yes, it's a great question. I think it's important to delineate the two omnichannel businesses that we have purchased. Kirkland's with its small format, what I consider under-market real estate—meaning that we believe we acquired leases that are under market, about 230 to 240 of them. They range from 5,000 to about 10,000 square feet, and you've heard me talk about them over the last year. The reason that we slowed our pace down of converting many of them to Bed Bath & Beyond home stores is as we looked at the numbers, we just didn't feel like we had all of the categories that we needed. And while we did the economic standoff with the current owners of The Container Store, I knew that eventually we would get that transaction to fold in with the pressure that we were putting on that business. So in addition to the 100 Container Store locations, we will have at least 100 small neighborhood format locations of Bed Bath & Beyond/Container Store, Container Store/Bed Bath & Beyond. As I move to The Container Store specifically, for the last 18 months, I've been studying this business, visiting every single store. I've been to, I think, 93 of the 100 already and spent a lot of time really trying to understand what they had, what they had too much of, how their sales per square foot were functioning, how they used to function, how the custom spaces function. And what I came down to is one simple conclusion. Across the 100 locations, there was 2.2 million square feet of retail. And in my opinion, half of that, maybe slightly more, was wildly underutilized, with triple-facing SKUs and certain categories far too wide and not deep enough and with an attempt to address certain categories that I felt fell very short. Rather than thinking about walking into the store and expecting to see Bed Bath & Beyond on the left and Container Store on the right, I would rather you thought about it as general merchandise in one specific area that includes storage and organization, kitchen, bath, bedroom, a little bit of decor and other impulse items that may be seasonally relevant in one portion of the store and the other portion of the store would be filled with custom spaces and design spaces, which would include Elfa, Closet Works, Gracious Home Cabinetry, which is a higher version of Cabinets To Go and Gracious Home Flooring, which is a higher version of Lumber Liquidators, but leveraging their existing supply chain and expertise. So that when a consumer walks through the door, it is my goal to take it from an average of about $220 per square foot to, I think, $500 a square foot within 24 months. Now nobody should be applauding or patting anybody on the back for $500 a square foot. The true number to get to the 7% EBITDA contribution on a four-wall basis is it takes about $615 a square foot, but it takes a very good balance between general merchandise and the home services business. And the reason that I create that delineation is that the blended margin of general merchandise should be in the 35% to 37% range, and the blended margin of the home services business is north of 60%. So we want to make sure that we're allocating not only enough talent, training and resources to home services, but we need that blended margin to come in north of 40% for us to see the kind of EBITDA margins we know give us the kind of returns on investment we need.
That's super helpful. And then maybe just a quick follow-up and more of a clarification for myself and maybe the group on the line here. The goal to remove $60 million of cost, right, that's sort of post all the announced acquisitions over the next nine months. Can you maybe frame up for us what the end state of that is? Does that bring the business to a positive free cash flow state? Or is there still more work to be done, whether it's sales growth or greater productivity initiatives to get to a free cash flow positive state?
It is my belief that if we continue with low to mid-single-digit revenue growth in our primary business, and we're able to stabilize the margin as we have for the last 12 months, continue to stabilize it, and we're able to expand the home services business, the $60 million of eliminated costs puts us way ahead of needing to worry about being cash flow positive. My goal is to get this business to a 6% to 7% EBITDA margin business. And to be candid with you, if you go back and look at the amount of costs that have been taken out of just the original Overstock business, which is north of $100 million, one should assume that my $60 million number is very conservative. What I want to be realistic about is that I want to make sure that we make the right decisions, the right decisions on what locations to close, the right decisions on what headcount to eliminate. But I have to be unfortunately brutally clear and honest with everybody, both internally and externally. With the formation of AI outside of our business and now being deeply integrated in our business and us only wanting to take on capabilities that we think add value, we're going to experience significant reduction in headcount. And in some cases, some of that reduction will be redeployed in areas where we think we're under-nurtured. Customer service does not have enough to my liking. The amount of qualified, trained staff in the stores, upselling customers, designing for customers, servicing their home for customers is not enough. But we are going to become an organization that puts its payroll in the field, that puts its payroll generating revenue and does not put its payroll in corporate offices with big leases and lots of warehouses. So we will be eliminating supply chain costs. We will be eliminating IT, accounting, marketing, merchandising, etc., across the entire platform. And it's never a good thing to do that. But if you go back and you study the independent financial statements of all these businesses just in a normal mid-cycle environment, The Container Store as an example, prior to COVID, $90 million every year. Kirkland's, $25 million every year. We know what Bed Bath can do, we know what buybuy BABY can do. The problem is we're living in a different world. And this particular forecast and model that I'm talking to you about today assumes no inflection in the housing market. The goal was always to get this business to neutral or slightly positive in this kind of economic environment that we're living in today, where the 10-year treasury is north of 4% and where mortgage rates are north of 6%. And while I don't have a crystal ball that will tell me when south of 4% and south of 6% are going to happen, we are going to take out all the costs to prove that we can be a breakeven company in an environment like this. What does that tell you? You get to a mid-cycle environment, and you're not talking about 4%, 5%, 6%, 7% increases in revenue, you're talking about low double-digit increases in revenue, 10%, 12%, 15%. And if the cost structure is right and the sourcing is right, then our profitability will be where it's supposed to be.
Your next question comes from the line of Thomas Forte with Maxim Group.
Amy and Brian, welcome to the call. Adrianne, it was a pleasure working with you, and I wish you all the best in your future endeavors. Marcus, I have one plain vanilla question, and I have one spicy one. We'll start with the plain vanilla first. Can you give your current thoughts on your decision tree for building, buying or partnering to advance your three pillars?
It's very simple for me. On a whiteboard back on December 31, while everybody was out having a party, I drew out what I thought the homeowner timeline was to owning a home in one simple cycle, and it's about 11 or 12 years. I thought about every single thing that the homeowner would do right before they decided to buy all the way to the point that they made the decision and closed on the sale they bought 11 years ago. I started to think about all the needs, both the products, the services, the financial needs that they would have, the insurance needs that they would have, the life events that they would experience and started to map out on the giant whiteboard what were all the types of products and services that we're missing to be able to do this. Most of you know my background. For 25 years, I had the blessing of being able to build a business that is an ecosystem around one particular lifestyle. I understood that in order to do that, you had to aggregate all these products and services. And as you did that, the moat would get deeper and deeper. The goal here is to not only build the moat, but to be part of the homeowner's life cycle, not just once but multiple times. What's missing for me was that it's great to sell couches and patio furniture and containers and decor for your home and flooring and all those things. But the reality is that the cost to find that customer, the cost to acquire that customer and retain that customer is what led most of those companies to have to take on debt, take on additional expenses, take on layers of personnel and be limited in their ability to perform. As I started studying all the things that were available in the marketplace, it is true I do like distressed things because for my shareholders we get a good deal. But we only get a good deal if we recognize that extracting capabilities and discarding duplicative costs has to be the mandate and the discipline. When I listed off all those brands, I don't think a year ago or two years ago anybody would have imagined that all those brands could be part of one system. But the thing that I think is missing is how it all interconnects. Amy can speak about that.
Yes. So we announced our partnership with Bilt this morning, and I think that's a really important moment to think about the red thread that goes through all of these brands. When you think of the cost of customer acquisition and the desire to make those customers trust our brands and be the most loyal they can be to us, we believe the partnership with Bilt begins to build that entire network for us of how we link our brands together within our own ecosystem and how we link our brands within the neighborhood that he or she lives in. That partnership begins to tie this together. Both Lisa, who is joining us on the call today, and Kyla, who's an amazing new talent that we added to our team, will be part of driving that with us. But there are parts of our business that are such a natural match for what Bilt already does with renters that we believe we can benefit from what they have already built as well as partner together on things such as the financial services pillar of our business that we want to do together with Bilt.
Great. And then for my follow-up, Marcus, you're about as sure as they come, and I appreciate all your efforts to drive shareholder value. I was curious what you thought of the following. Would you consider converting any of The Container Store locations to AI compute centers given their close proximity to urban city centers?
The answer is no. We don't want to play games with having AI be part of our boxes. But what I can tell you definitively is that in our new team member Kyla, who is joining our team, and Lisa, our Chief Operating Officer, the two of them have been intensely focused on eliminating headcount and reducing costs by layering in AI as part of all of our business. Even when we start to look in the accounting or the risk mitigation world, where we're managing payables or managing receivables or managing treasury, this is a technology business first. The problem was the technology that we've been working through was a decade or two old. That doesn't make it bad, it just makes it not current. While we're not going to turn any of our locations into AI centers, we are going to turn our business into an AI-centric business—not because it's fun to say or we think it's going to drive our stock, but because we know it's necessary to be competitive. We know the customer expects curated information. And we know that in order to efficiently market our business and get our marketing costs down back into the low-teens or lower, we have to be far more efficient with everything.
Your next question comes from the line of Alicia Reese with Wedbush.
First, just following up on the last question. You had mentioned in your prepared remarks that The Container Store real estate is wildly underutilized. Just wondering if you can speak to some possible uses if it's not for AI data centers or anything of that nature. What possible uses have you considered so far?
When I take a typical store that's around 22,000 square feet, those stores have been generating a decent amount of revenue with general merchandise that The Container Store historically held and sold Elfa Closets and a few other custom closet systems. As we acquire businesses across the home space, it is our expectation that all of them in some form or another will have a physical presence there. Whether that is providing cash offers on real estate or allowing a title closing to happen there or allowing somebody to come prepared to take their son or daughter to college or getting ready for the Christmas holiday or picking out new floors for your newly bought house or designing a new kitchen—we want to make sure that every single square inch of those 22,000 square feet are intensely utilized. When I talk to you about the quality of this real estate, for those of you that know The Container Store in your own town, it is the cream of the crop real estate. But one of the things that I think brought The Container Store to a tough spot is that it didn't have a broad enough offering for the home; it was very niche. As the internet became more predominant, it lost a little bit of its competitive edge. As the economy got tougher, it lost a little bit of its competitive edge. Historically, The Container Store has served the customer that was probably $200,000 a year in household income. We believe that the addition of Bed Bath not only widens the funnel for that customer, but the offering widens as well. I would expect that within 24 months, the revenue coming out of those 22,000 square feet when you incorporate all the home services and the general merchandise should be double. I don't think that's a pie-in-the-sky number only because the company has done it before. We want to utilize those spaces to meet customers, to serve customers and to have every pillar in our company, including our potential brokerage business, our credit union business, our credit card business, all of those businesses extract value. Internally we like to say we're going to sweat the assets and get every last drop of revenue that piece of property was intended to give us.
I'm wondering if you could also speak to the product mix shift at the original Overstock.com site and how you're honing that. To what extent are you layering products from the other businesses now or steering people to other banners under your other businesses?
As we think about all of the banners, each fills a unique portion of the home segment of the business. So as Marcus described in The Container Store real estate, in our largest stores, for example, there's an opportunity for all of those things to be represented. But when you get back to the e-commerce business, there's a massive opportunity for each of those to be more thoughtfully curated to what we expect from those brands. Overstock specifically has really been headed in the right direction in terms of its focus on patio, rugs and furniture as well as a modest amount of fashion and luxury that does well on that site. Bed Bath & Beyond is probably where we have the most opportunity to fine-tune and make sure that business is the best of what we remember while still protecting some of the growth that we've acquired over time with the legacy Overstock customer. So I think there's tremendous opportunity to curate each of them, but really bring it together in the store footprint.
I want to add a little to that. Overstock is run by an unbelievable leader who came back to the company because she liked the direction we were going and has brought in a whole new supporting cast of merchants underneath her. If you think about Overstock in its best days, it was great brands and big-ticket items at unbelievable prices. You can expect that even by the end of the year—not to have people overreact—but even by the end of the year, in addition to selling patio furniture, luxury watches and handbags, we will be selling cars and anything else that we believe fits into the four corners of the property and the four walls of the house. We're not going to be the sellers; it's a marketplace, and we rely on the best companies, the best brands and the best supply chains to satisfy that. Overstock, when I look at all of our e-commerce businesses, separate from normal improvement in Bed Bath and improvement in The Container Store, is the one with the most potential to be a massive brand again. On a trailing 12 months, we're back up around $0.25 billion. Every day, we're seeing $700,000 to $800,000 in revenue. We know that it needs to be unlocked and unleashed. We've always been trying to manage priorities while getting to profitability. As we bring on these other businesses and start to add billions in revenue—Container Store, Bed Bath, Overstock, Lumber, Cabinets To Go, Elfa, Closet Works— we're starting to approach the $2-plus billion range. When you start to add all of that revenue and gross profit and you extract the costs that come with those, you start to get to profitability within a year or two in a material way. Overstock is a prize that hasn't gotten enough attention, but it will continue to get attention, and we expect growth to continue to be low double-digit like it has been over the last 12 months.
Your next question comes from the line of Jonathan Matuszewski with Jefferies.
My first question, Marcus, was on a theme that's emerging here, and that's potential revenue synergies from cross-marketing across the businesses that you've been aggregating. How should we think about measuring progress there? As you think about the separate customer files today, where does cross-shopping stand before integration? Are there any milestones you have in terms of measuring as these businesses come under one umbrella?
We've been working with a firm out of Canada; Lisa Foley, our Chief Operating Officer, has been working to understand how to create one single data layer. That data layer takes the entry point of any customer in any brand at any moment in time and ingests them into that data layer. Ultimately, what we want to do is ensure that we match the address and the person and create two unique identifiers. The first is the homeowner or renter—the person—and their behavior and historical purchases so we know their preferences. The second is the home itself. I liken it to the automobile business when you think about cars and VIN numbers. There's a concept called VIN explosion, which allows you to understand a lot more about a vehicle and its journey through life—repairs, maintenance, accidents, insurance, everything. We look at the home address the same way. The single sign-on with the customer tells us about them and the home address tells us about the home. Over time, with partners including title, mortgage, credit card and other brands, we want to gather everything about that address: purchase price, square footage, permits, titles, deeds, surveys, mortgages. You can expect that a lot of that data will live on blockchain. This company is heavily invested in tokenization and blockchain. We believe the transfer of information for the homeowner, or for the home itself, transferring from one owner through title to another owner should be able to transfer proprietary data about that home as well. As we understand those two data sets, we create journeys that allow us to communicate with those assets uniquely based on where we think they are in their 11- or 12-year life cycle. Lisa has done an incredible job starting to craft how we communicate with those different assets and giving them the right offer at the right time with the right price and tone, hoping to capture something there as opposed to spraying every customer with every email every single day. It is not a perfect science today, which is why Amy and Lisa fought hard to bring Kyla into our organization. She has transformed multiple companies on digital and AI transformation roadmaps and we believe she can help simplify ingestion of data, understand it and communicate back in a way we don't believe any other company in the home space can do. There's no other company in the home space—not Home Depot, not Wayfair—that will have as many touch points across those 11 years and as many entry points into the life cycle as we have. And we're not done making acquisitions. Whether it's buying a brokerage and knowing that originations are hot today or doing a HELOC on blockchain or selling someone a crib, all those moments create opportunities to bring them into our systems and keep them for life.
Really helpful, Marcus. Quick follow-up: as we think about the core business, you mentioned some progress on improved repeat spend. Can you provide an update on customer loyalty, specifically the Welcome Rewards program? Where is it today in terms of enrollment, how productive is that customer, and what's possible ahead with the changes you're making to merchandising and so forth?
First and foremost, the e-commerce business is not our core business anymore. Our core business is the Everything Home business and everything around it. Particularly when you look at revenue and margin contribution, the e-commerce business, coupled with our retail business, is our omnichannel business—Pillar 1. Those other pillars matter significantly to ensure we are addressing everything the homeowner wants. As it relates to our Welcome Rewards, our Welcome Rewards program will be ingested by our Bilt program.
As we think about the Bilt program, consider it the halo over all of the loyalty programs in our system. We want to recognize that if someone is a buybuy BABY customer or a Cabinets To Go customer, that's how they entered the system, but we want them to be able to earn across the whole ecosystem of Beyond Rewards, which will be powered by Bilt. Those points can be leveraged and traded from anything from a crib purchase over to Bed Bath & Beyond to how you think about mortgage and our financial services businesses as well. We're less focused on Beyond Rewards as a stand-alone reward program and more focused on building out this entire ecosystem that we believe customers will find far more valuable as they shop all of our brands.
One more thing: over the last 24 months we've been talking about taking revenue down and removing SKUs and cutting negative-margin vendors and reducing headcount. It has been a painful process, which is why our stock is, in my opinion, wildly undervalued. But based on what was happening, we understood that. As we did transactions with sellers and asked them to take back stock, we were asking them to put their businesses in our hands. They understood that what we were trying to build was something that had never been done before. If you start by understanding data and how to catalog it and how to communicate with it, and then surround it with businesses in the same ecosystem, you're taking good brands with a lower cost structure and good talent and allowing them to play in a different sandbox. The customer should be the big winner because as they do business with us in one brand, they should be earning rewards. One thing I told the founders of Bilt when we did the deal is I would only do this deal if we could build a model where a renter who buys a lot of stuff from us can earn enough points to have enough of a down payment to buy their first home. I've been obsessed about the lack of affordability of buying a home in America. I don't see any company doing anything about it. Part of what we want to do is bring low-cost, high-value solutions. Whether that's bringing a credit union with mortgages, HELOCs, checking and savings, or partnering with Bilt to allow customers to enjoy rewards across many brands, that's what has been missing. We want to be known as a data and technology company that happens to cut its teeth in the home space, the largest TAM in America.
Your next question comes from the line of Bernard McTernan with Needham.
I was wondering if the better-than-expected results, at least relative to our estimates for 1Q, impact how you're thinking about the year at all. Within that, any impact you're seeing either on the consumer or suppliers or anything you're hearing in the industry, for example higher gas prices impacting the macro?
We haven't seen gas prices change our demand trajectory, but we are holding steady with the guidepost that we provided earlier in the year, which is low to mid-single-digit revenue growth. It's important to understand one part very clearly. As we get into Q2, we will have one-time operating expenses directly associated with eliminating redundancies, purging systems, terminating leases and doing all the unpopular things required. Brian has committed that in our second quarter we will clearly show what the core revenue, core margin and core operating expenses are, and we will highlight clearly what expenses are one-time. For example, in the second quarter, we will run through the P&L about $12 million to $13 million of expenses through the Kirkland's P&L because we didn't have it in our hands until April 1. I'm happy with what we're seeing there. I also want to be clear that when we did the deal earlier, there were 300 stores; there are now 240 stores. We may end at 210 stores. I'm not taking any chances deploying shareholder assets on anything I don't think we can get a return on. I'd rather be upfront about what we're getting out of it. With The Container Store, there are already three leases we've agreed to exit, and we will be exiting those locations. We're getting out of distribution centers, getting rid of old contracts. As you look at the next couple of quarters, there will be incremental expenses. I believe Q2 will have about $13 million of one-time expenses. I would expect Q3 to have around $13 million to $14 million as well related to The Container Store. We don't see as much in the Lumber Liquidators and Cabinets To Go business. Jason Delves, the CEO of that company, runs a tight ship. As we think about all the deals we're doing, we require many of those businesses to make changes when we sign the deal. As you see other deals announced, you're likely to see immediate and radical changes happening at the same time.
Understood. As a follow-up, with all these acquisitions set to close in relatively short order, how should we expect them to start impacting the larger company strategy? You mentioned a bunch of things that need to be done once deals close. What's the timeline that we should expect for them to be a positive influence in that Connected Home strategy?
I think in Q2, based on when we close and the time of year, we'll see about $75 million to $80 million of increase coming out of Kirkland's—it's a second-half-of-year business. We're still seeing nice revenue growth in e-commerce of low to mid-single-digit. The only thing you should expect to see in Q2 is about $13 million of one-time expenses. So whatever your consensus was, I would add about $13 million to it. We're hoping to be a little bit better than that. Then in Q3 with the closing of The Container Store, I would expect a forecast in probably 30 to 45 days that will give you an outlook and a range, assuming the economy doesn't improve, with about 6% to 7% revenue growth on a CAGR for '27, '28 and '29. That's what we're hoping to show you in the next 45 to 60 days. The Container Store business is about $0.5 billion. Kirkland's is about $325 million to $350 million annualized depending on how many stores we keep. The Lumber Liquidators and Cabinets To Go business is about $500 million. The installation business we're discussing is about $60 million. We'll build all that for you as we integrate. They'll fold in cadence-wise, and by August-September we should have everything closed that you've heard about today. That doesn't mean there won't be more tuck-in acquisitions that fit into Pillar 1, 2 or 3.
We have reached the end of the Q&A session. I will now turn the call back to Marcus Lemonis for closing remarks.
I don't have any closing remarks. We are happy that we were able to report Q1, and we're looking forward to exciting quarters ahead. Thanks for joining us.
This concludes today's call. Thank you for attending. You may now disconnect.