10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________ 

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

For the quarterly period ended June 2, 2018

Commission File Number 0-20214

BED BATH & BEYOND INC.

(Exact name of registrant as specified in its charter)

New York	11-2250488
(State of incorporation)	(IRS Employer Identification No.)
650 Liberty Avenue, Union, New Jersey    07083
(Address of principal executive offices)    (Zip Code)

Registrant's telephone number, including area code: (908) 688-0888

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  ☒      No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes  ☒      No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer,""accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ☒	Accelerated filer  ☐
Non-accelerated filer  ☐ (Do not check if a smaller reporting company)	Smaller reporting company  ☐ Emerging growth company ☐

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 7(a)(2)(B) of the Securities Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  ☐      No  ☒

Number of shares outstanding of the issuer's Common Stock:

Class	Outstanding at June 2, 2018
Common Stock - $0.01 par value	140,131,005

BED BATH & BEYOND INC. AND SUBSIDIARIES

INDEX 

PART I - FINANCIAL INFORMATION
	Item 1.		Financial Statements (unaudited)
		Consolidated Balance Sheets June 2, 2018 and March 3, 2018
		Consolidated Statements of Earnings Three Months Ended June 2, 2018 and May 27, 2017
		Consolidated Statements of Comprehensive Income Three Months Ended June 2, 2018 and May 27, 2017
		Consolidated Statements of Cash Flows Three Months Ended June 2, 2018 and May 27, 2017
		Notes to Consolidated Financial Statements
	Item 2.		Management's Discussion and Analysis of Financial Condition and Results of Operations
	Item 3.		Quantitative and Qualitative Disclosures about Market Risk
	Item 4.		Controls and Procedures
PART II - OTHER INFORMATION
	Item 1.		Legal Proceedings
	Item 1A.		Risk Factors
	Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds
	Item 6.		Exhibits
	Signatures
	Certifications

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BED BATH & BEYOND INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands, except per share data)

(unaudited)

	June 2, 2018			March 3, 2018
Assets
Current assets:
Cash and cash equivalents	$	678,646		$	346,140
Short term investment securities	148,313			378,039
Merchandise inventories	2,646,263			2,730,874
Prepaid expenses and other current assets	483,159			516,025
Total current assets	3,956,381			3,971,078
Long term investment securities	19,957			19,517
Property and equipment, net	1,893,230			1,909,289
Goodwill	716,283			716,283
Other assets	427,895			424,639
Total assets	$	7,013,746		$	7,040,806
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable	$	1,082,943		$	1,197,504
Accrued expenses and other current liabilities	716,069			633,100
Merchandise credit and gift card liabilities	329,055			335,081
Total current liabilities	2,128,067			2,165,685
Deferred rent and other liabilities	431,799			431,592
Income taxes payable	57,507			62,823
Long term debt	1,492,194			1,492,078
Total liabilities	4,109,567			4,152,178
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     341,795, respectively; outstanding 140,131 and 140,498 shares, respectively	3,426			3,418
Additional paid-in capital	2,082,238			2,057,975
Retained earnings	11,360,572			11,343,503
Treasury stock, at cost; 202,511 and 201,297 shares, respectively	(10,490,082		)	(10,467,972		)
Accumulated other comprehensive loss	(51,975		)	(48,296		)
Total shareholders' equity	2,904,179			2,888,628
Total liabilities and shareholders' equity	$	7,013,746		$	7,040,806

See accompanying Notes to Consolidated Financial Statements.

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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

See accompanying Notes to Consolidated Financial Statements.

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BED BATH & BEYOND INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

(in thousands, unaudited)

	Three Months Ended
	June 2, 2018			May 27, 2017
Net earnings	$	43,576		$	75,283
Other comprehensive income (loss):
Change in temporary impairment of auction rate securities, net of taxes	315			166
Pension adjustment, net of taxes	136			199
Currency translation adjustment	(4,130		)	(5,838		)
Other comprehensive loss	(3,679		)	(5,473		)
Comprehensive income	$	39,897		$	69,810

See accompanying Notes to Consolidated Financial Statements.

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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
Decrease (increase) 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

See accompanying Notes to Consolidated Financial Statements.

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BED BATH & BEYOND INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

1) Basis of Presentation

The accompanying consolidated financial statements have been prepared without audit. In the opinion of management, the accompanying consolidated financial statements contain all adjustments (consisting of only normal recurring accruals and elimination of intercompany balances and transactions) necessary to present fairly the financial position of Bed Bath & Beyond Inc. and subsidiaries (the "Company") as of June 2, 2018 and March 3, 2018 and the results of its operations, comprehensive income and cash flows for the three months ended June 2, 2018 and May 27, 2017, respectively.

The accompanying unaudited consolidated financial statements are presented in accordance with the requirements for Form 10-Q and consequently do not include all the disclosures normally required by U.S. generally accepted accounting principles ("GAAP"). Reference should be made to Bed Bath & Beyond Inc.'s Annual Report on Form 10-K for the fiscal year ended March 3, 2018 for additional disclosures, including a summary of the Company's significant accounting policies, and to subsequently filed Form 8-Ks.

The Company accounts for its operations as two operating segments: North American Retail and Institutional Sales. The Institutional Sales operating segment, which is comprised of Linen Holdings, does not meet the quantitative thresholds under GAAP and therefore is not a reportable segment. Net sales outside of the U.S. for the Company were not material for the three months ended June 2, 2018 and May 27, 2017. As the Company operates in the retail industry, its results of operations are affected by general economic conditions and consumer spending habits.

2) Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606). This guidance requires an entity to recognize revenue in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard also will result in enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In July 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. This guidance deferred the effective date of ASU 2014-09 for one year from the original effective date. In accordance with the deferral, ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. In 2016, the FASB issued several amendments to clarify various aspects of the implementation guidance. ASU 2014-09 can be adopted either retrospectively to each prior reporting period presented or as a cumulative-effect adjustment as of the date of adoption.  At the beginning of the first quarter of fiscal 2018, the Company adopted ASU 2014-09 using the modified retrospective transition method and recognized the cumulative effect of applying this standard to opening retained earnings. The Company recorded a net after-tax reduction to opening retained earnings of approximately $4.2 million as of March 4, 2018. The comparative financial information has not been adjusted and continues to be reported under ASC Topic 605, Revenue Recognition (Topic 605).

The majority of the Company’s revenue is generated from the sale of product in its retail stores, which will continue to be recognized when control of the product is transferred to the customer. The adoption of ASU 2014-09 resulted in the following changes:

• A change in the timing of recognizing advertising expense related to direct response advertising. These costs that were previously expensed over the period during which the sales were expected to occur will now be expensed on the first day of the direct response advertising event.

• A change in the presentation of the sales return reserve on the consolidated balance sheet, as estimated costs of returns will be recorded as a current asset rather than netted with the sales return reserve.

• Changes in the presentation of certain other revenue streams on the consolidated statement of earnings between net sales, cost of sales, and selling, general and administrative expenses.

The below tables set forth the adjustments to the Company’s consolidated statement of earnings and consolidated balance sheet as a result of the newly adopted revenue recognition standard.

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	Three months ended June 2, 2018
(In thousands)	As Reported		Balances Without Adoption of ASU 2014-09		Impact of Adoption Increase/(Decrease)
Net sales	$	2,753,667	$	2,755,312	$	(1,645	)
Cost of sales	1,788,819		1,795,164		(6,345		)
Gross profit	964,848		960,148		4,700
Selling, general and administrative expenses	883,619		888,154		(4,535		)
Operating profit	81,229		71,994		9,235
Interest expense, net	16,732		16,732		—
Earnings before provision for income taxes	64,497		55,262		9,235
Provision for income taxes	20,921		18,590		2,331
Net earnings	$	43,576	$	36,672	$	6,904
Net earnings per share - Diluted	$	0.32	$	0.27	$	0.05

	June 2, 2018
(In thousands)	As Reported		Balances Without Adoption of ASU 2014-09		Impact of Adoption Increase/(Decrease)
Assets
Merchandise inventories	$	2,646,263	$	2,648,181	$	(1,918	)
Prepaid expenses and other current assets	483,159		378,516		104,643
Liabilities and Shareholders' Equity
Accrued expenses and other current liabilities	716,069		605,137		110,932
Merchandise credit and gift card liabilities	329,055		339,945		(10,890		)
Retained earnings	11,360,572		11,357,889		2,683

The Company expects the impact of the adoption of the new standard to be immaterial to the Company's full year fiscal 2018 consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. ASU 2017-01 requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of identifiable assets, the set of assets would not represent a business. Also, in order to be considered a business, an acquisition would have to include an input and a substantive process that together significantly contribute to the ability to produce outputs. Under the update, fewer sets of assets are expected to be considered businesses. ASU 2017-01 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The Company adopted this guidance at the beginning of the first quarter of fiscal 2018 and it did not have a material effect on the Company's consolidated financial position, results of operations, or cash flows.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This guidance requires an entity to recognize lease liabilities and a right-of-use asset for all leases on the balance sheet and to disclose key information about the entity's leasing arrangements. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, with earlier adoption permitted. ASU 2016-02 must be adopted using a modified retrospective approach for all leases existing at, or entered into after the date of initial adoption, with an option to elect to use certain transition relief. The Company is currently evaluating the impact of this new standard on its consolidated financial statements and related disclosures, but expects that it will result in a significant increase in the assets and liabilities recorded on the consolidated balance sheet.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 eliminates the requirement to calculate the implied fair value of goodwill to measure the amount of impairment loss, if any, under the second step of the current goodwill impairment test. Under the update, the goodwill impairment loss would be measured as the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying

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amount of goodwill. ASU 2017-04 is effective for annual reporting periods beginning after December 15, 2019, with early adoption permitted. The adoption of this guidance is not expected to have a significant effect on the Company's consolidated financial position, results of operations, or cash flows.

3) Revenue Recognition

Sales are recognized upon purchase by customers at the Company’s retail stores or upon delivery for products purchased from its websites. The value of point-of-sale coupons and point-of-sale rebates that result in a reduction of the price paid by the customer are recorded as a reduction of sales. Shipping and handling fees that are billed to a customer in a sale transaction are recorded in sales. Taxes, such as sales tax, use tax and value added tax, are not included in sales.

Revenues from gift cards, gift certificates and merchandise credits are recognized when redeemed. Gift cards have no provisions for reduction in the value of unused card balances over defined time periods and have no expiration dates. For the three months ended June 2, 2018, the Company recognized net sales for gift card and merchandise credit redemptions of approximately $54.0 million which were included in merchandise credit and gift card liabilities on the consolidated balance sheet as of March 3, 2018.

Sales returns are provided for in the period that the related sales are recorded based on historical experience. Although the estimate for sales returns has not varied materially from historical provisions, actual experience could vary from historical experience in the future if the level of sales return activity changes materially. In the future, if the Company concludes that an adjustment is required due to material changes in the returns activity, the liability for estimated returns and the corresponding right of return asset will be adjusted accordingly. As of June 2, 2018, the liability for estimated returns of $150.6 million is included in accrued expenses and other current liabilities and the corresponding right of return asset for merchandise of $108.8 million is included in prepaid expenses and other current assets.

The Company sells a wide assortment of domestics merchandise and home furnishings. Domestics merchandise includes categories such as bed linens and related items, bath items and kitchen textiles. Home furnishings include categories such as kitchen and tabletop items, fine tabletop, basic housewares, general home furnishings (including furniture and wall décor), consumables and certain juvenile products. Sales of domestics merchandise and home furnishings accounted for approximately 36.0% and 64.0% of net sales, respectively, for the three months ended June 2, 2018 and approximately 36.2% and 63.8% of net sales, respectively, for the three months ended May 27, 2017.

4) Income Taxes

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act significantly revised the U.S. tax code by, among other things, (i) reducing the federal corporate income tax rate, effective January 1, 2018, from 35% to 21%, (ii) imposing a one-time transition tax on earnings of foreign subsidiaries deemed to be repatriated and (iii) implementing a modified territorial tax system.

In March 2018, the FASB issued ASU 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to the Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin No. 118 (“SAB 118”). This update provides guidance on income tax accounting implications under the Tax Act. SAB 118 addressed the application of GAAP to situations when a registrant does not have the necessary information available, prepared or analyzed in reasonable detail to complete the accounting for certain income tax effects of the Tax Act and allows companies to record provisional amounts during a remeasurement period not to exceed one year after the enactment date while the accounting impact remains under analysis.

The Company has reasonably estimated the impact of the Tax Act in its fiscal 2017 provision for income taxes in accordance with its interpretation of the Tax Act and available guidance. The Tax Act resulted in a net unfavorable tax impact of approximately $10.5 million recorded in the fiscal fourth quarter of 2017.

During the three months ended June 2, 2018, the Company made no adjustments to previously recorded provisional amounts related to the Tax Act. The provisional amounts are related to the remeasurement of the Company’s net deferred tax assets and the transition tax on accumulated foreign earnings, which collectively totaled approximately $26.8 million. The Company believes the remeasurement of its net deferred tax assets is complete, except for changes in estimates that can result from finalizing the filing of its 2017 U.S. income tax return and changes that may be a direct impact of other provisional amounts due to the enactment of the Tax Act. The estimated transition tax was recorded based on the Company’s initial evaluation of the impact of the Tax Act and is subject to change during fiscal 2018 as the Company continues to refine, analyze and update the underlying data, computations and assumptions used to prepare this provisional amount during the measurement period. In addition, these estimates may be impacted as the Company further analyzes available tax accounting methods and elections, and state tax conformity to the federal tax changes and guidance issued by regulatory bodies that provide interpretive guidance of the Tax Act. Any adjustments to the

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provisional amounts will be recognized as a component of the provision for income taxes in the period in which such adjustments are determined within the annual period following the enactment of the Tax Act. Additionally, the Company continues to evaluate the Global Intangible Low-Taxed Income (“GILTI”) provisions of the Tax Act and the impact, if any, on its consolidated financial statements. As a result, the Company has not included any amount related to GILTI in its consolidated financial statements as of June 2, 2018.

5) Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., "the exit price") in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various valuation approaches, including quoted market prices and discounted cash flows. The hierarchy for inputs used in measuring fair value maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect a company's judgment concerning the assumptions that market participants would use in pricing the asset or liability developed based on the best information available under the circumstances. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an asset or liability must be classified in its entirety based on the lowest level of input that is significant to the measurement of fair value. The fair value hierarchy is broken down into three levels based on the reliability of inputs as follows:

• Level 1 - Valuations based on quoted prices in active markets for identical instruments that the Company is able to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.

• Level 2 - Valuations based on quoted prices in active markets for instruments that are similar, or quoted prices in markets that are not active for identical or similar instruments, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

• Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

As of June 2, 2018, the Company's financial assets utilizing Level 1 inputs included short term trading investment securities traded on active securities exchanges. The Company did not have any financial assets utilizing Level 2 inputs. Financial assets utilizing Level 3 inputs included long term investments in auction rate securities consisting of preferred shares of closed end municipal bond funds (See "Investment Securities," Note 7). 

Fair Value of Financial Instruments

The Company's financial instruments include cash and cash equivalents, investment securities, accounts payable, long term debt and certain other liabilities. The Company's investment securities consist primarily of U.S. Treasury securities, which are stated at amortized cost, and auction rate securities, which are stated at their approximate fair value. The book value of the financial instruments, excluding the Company's long term debt, is representative of their fair values. The fair value of the Company's long term debt is approximately $1.192 billion as of June 2, 2018, which is based on quoted prices in active markets for identical instruments (i.e., Level 1 valuation), compared to the carrying value of approximately $1.500 billion.

6) Cash and Cash Equivalents

Included in cash and cash equivalents are credit and debit card receivables from banks, which typically settle within five business days, of $95.5 million and $95.6 million as of June 2, 2018 and March 3, 2018, respectively.

7) Investment Securities

The Company's investment securities as of June 2, 2018 and March 3, 2018 are as follows:

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(in millions)	June 2, 2018		March 3, 2018
Available-for-sale securities:
Long term	$	19.9	$	19.4
Trading securities:
Short term	88.4		86.3
Held-to-maturity securities:
Short term	59.9		291.7
Total investment securities	168.2		397.4

Auction Rate Securities

As of June 2, 2018 and March 3, 2018, the Company's long term available-for-sale investment securities represented approximately $20.3 million par value of auction rate securities consisting of preferred shares of closed end municipal bond funds, less temporary valuation adjustments of approximately $0.4 million and $0.9 million, respectively. Since these valuation adjustments are deemed to be temporary, they are recorded in accumulated other comprehensive loss, net of a related tax benefit, and did not affect the Company's net earnings.

U.S. Treasury Securities

As of June 2, 2018 and March 3, 2018, the Company’s short term held-to-maturity securities included approximately $59.9 million and $291.7 million of U.S. Treasury Bills with remaining maturities of less than one year, respectively. These securities are stated at their amortized cost which approximates fair value, which is based on quoted prices in active markets for identical instruments (i.e., Level 1 valuation).

Trading Investment Securities

The Company's trading investment securities, which are provided as investment options to the participants of the nonqualified deferred compensation plan (“NQDC”), are stated at fair market value. The values of these trading investment securities included in the table above are approximately $88.4 million and $86.3 million as of June 2, 2018 and March 3, 2018, respectively.

On December 27, 2017, the Company terminated its NQDC. After December 27, 2017, no participant deferrals will be accepted and all balances will be liquidated more than 12 months but less than 24 months after December 27, 2017. Until the final payment date, the NQDC will continue to operate in the ordinary course, except that no new participant deferrals will be credited to participant accounts under the NQDC.

8) Property and Equipment

As of June 2, 2018 and March 3, 2018, included in property and equipment, net is accumulated depreciation of approximately $3.2 billion and $3.1 billion, respectively.

9) Long Term Debt

Senior Unsecured Notes

On July 17, 2014, the Company issued $300 million aggregate principal amount of 3.749% senior unsecured notes due August 1, 2024, $300 million aggregate principal amount of 4.915% senior unsecured notes due August 1, 2034 and $900 million aggregate principal amount of 5.165% senior unsecured notes due August 1, 2044 (collectively, the "Notes"). Interest on the Notes is payable semi-annually on February 1 and August 1 of each year.

The Notes were issued under an indenture (the "Base Indenture"), as supplemented by a first supplemental indenture (together, with the Base Indenture, the "Indenture"), which contains various restrictive covenants, which are subject to important limitations and exceptions that are described in the Indenture. The Company was in compliance with all covenants related to the Notes as of June 2, 2018.

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Revolving Credit Agreement

On November 14, 2017, the Company replaced its existing $250 millionfive year senior unsecured revolving credit facility agreement with various lenders with a new $250 millionfive year senior unsecured revolving credit facility agreement ("Revolver") with various lenders maturing November 14, 2022. The new Revolver has essentially the same terms and requirements as the prior revolving credit facility agreement. During the three months ended June 2, 2018, the Company did not have any borrowings under the Revolver.

The Revolver contains customary affirmative and negative covenants and also requires the Company to maintain a maximum leverage ratio. The Company was in compliance with all covenants related to the Revolver as of June 2, 2018.

Deferred financing costs associated with the Notes and the revolving credit facilities of approximately $10.5 million were capitalized. In the accompanying Consolidated Balance Sheets, the deferred financing costs are included in long term debt, net of amortization, for the Notes, and are included in other assets, net of amortization, for the Revolver. These deferred financing costs for the Notes and the Revolver are being amortized over the term of each of the Notes and the term of the Revolver and such amortization is included in interest expense, net in the Consolidated Statements of Earnings. Interest expense related to the Notes and the revolving credit facilities, including the commitment fee and the amortization of deferred financing costs, was approximately $18.2 million for both the three months ended June 2, 2018 and May 27, 2017.

Lines of Credit

At June 2, 2018, the Company maintained two uncommitted lines of credit of $100 million each, with expiration dates of August 29, 2018 and February 24, 2019, respectively. These uncommitted lines of credit are currently and are expected to be used for letters of credit in the ordinary course of business. During the first three months of fiscal 2018, the Company did not have any direct borrowings under the uncommitted lines of credit. Although no assurances can be provided, the Company intends to renew both uncommitted lines of credit before the respective expiration dates.

10) Shareholders Equity

The Company has authorization to make repurchases from time to time in the open market or through other parameters approved by the Board of Directors pursuant to existing rules and regulations.

Between December 2004 and September 2015, the Company's Board of Directors authorized, through several share repurchase programs, the repurchase of $11.950 billion of its shares of common stock. The Company also acquires shares of its common stock to cover employee related taxes withheld on vested restricted stock and performance stock unit awards. In the first three months of fiscal 2018, the Company repurchased approximately 1.2 million shares of its common stock for a total cost of approximately $22.1 million, bringing the aggregate total of common stock repurchased to approximately 202.5 million shares for a total cost of approximately $10.5 billion since the initial authorization in December 2004. The Company has approximately $1.5 billion remaining of authorized share repurchases as of June 2, 2018.

During fiscal 2016, the Company's Board of Directors authorized a quarterly dividend program. During the three months ended June 2, 2018 and May 27, 2017, total cash dividends of $21.4 million and $18.2 million were paid, respectively. Subsequent to the end of the first quarter of fiscal 2018, on June 27, 2018, the Company's Board of Directors 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 Company expects to pay quarterly cash dividends on its common stock in the future, subject to the determination by the Board of Directors, based on an evaluation of the Company's earnings, financial condition and requirements, business conditions and other factors.

Cash dividends, if any, are accrued as a liability on the Company's consolidated balance sheets and recorded as a decrease to additional paid-in capital when declared.

11) Stock-Based Compensation

The Company measures all employee stock-based compensation awards using a fair value method and records such expense, net of estimated forfeitures, in its consolidated financial statements. Currently, the Company's stock-based compensation relates to restricted stock awards, stock options and performance stock units. The Company's restricted stock awards are considered nonvested share awards.

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Stock-based compensation expense for the three months ended June 2, 2018 was approximately $23.6 million ($15.9 million after tax or $0.12 per diluted share). Stock-based compensation expense for the three months ended May 27, 2017 was approximately $21.5 million ($12.4 million after tax or $0.09 per diluted share). In addition, the amount of stock-based compensation cost capitalized for the three months ended June 2, 2018 and May 27, 2017 was approximately $0.7 million and $0.5 million, respectively.

Incentive Compensation Plans

The Company grants awards under the Bed Bath & Beyond 2012 Incentive Compensation Plan (the "2012 Plan"), which amended and restated the Bed Bath & Beyond 2004 Incentive Compensation Plan (the "2004 Plan"). The 2012 Plan includes an aggregate of 43.2 million common shares authorized for issuance and the ability to grant incentive stock options. Outstanding awards that were covered by the 2004 Plan continue to be in effect under the 2012 Plan.

The 2012 Plan is a flexible compensation plan that enables the Company to offer incentive compensation through stock options (whether nonqualified stock options or incentive stock options), restricted stock awards, stock appreciation rights, performance awards and other stock based awards, including cash awards. Under the 2012 Plan, grants are determined by the Compensation Committee for those awards granted to executive officers and by an appropriate committee for all other awards granted. Awards of stock options and restricted stock generally vest in five equal annual installments beginning one to three years from the date of grant. Awards of performance stock units generally vest over a period of four years from the date of grant dependent on the Company's achievement of performance-based tests and subject, in general, to the executive remaining in the Company's service on specified vesting dates.

The Company generally issues new shares for stock option exercises, restricted stock awards and vesting of performance stock units.

On May 22, 2018, the Company adopted the Bed Bath & Beyond 2018 Incentive Compensation Plan (the “2018 Plan”), subject to and effective upon shareholder approval, which was obtained on June 29, 2018, subsequent to the end of the first quarter of fiscal 2018. The 2018 Plan is generally based on the provisions of the 2012 Plan as currently in effect and also includes an aggregate share reserve of 4.6 million shares of common stock. The 2012 Plan will continue in effect without modification in accordance with its existing terms. The 2012 Plan and the 2018 Plan have a total of 47.8 million shares authorized for issuance.

Stock Options

Stock option grants are issued at fair market value on the date of grant and generally become exercisable in either three or five equal annual installments beginning one year from the date of grant, subject, in general, to the recipient remaining in the Company's service on specified vesting dates. Option grants expire eight years after the date of grant. All option grants are nonqualified. As of June 2, 2018, unrecognized compensation expense related to the unvested portion of the Company's stock options was $18.8 million, which is expected to be recognized over a weighted average period of 3.3 years.

The fair value of the stock options granted was estimated on the date of the grant using a Black-Scholes option-pricing model that uses the assumptions noted in the following table.

	Three Months Ended
Black-Scholes Valuation Assumptions (1)	June 2, 2018		May 27, 2017
Weighted Average Expected Life (in years) (2)	6.7		6.7
Weighted Average Expected Volatility (3)	34.96	%	26.49	%
Weighted Average Risk Free Interest Rates (4)	2.92	%	2.17	%
Expected Dividend Yield (5)	3.80	%	1.60	%

(1) Forfeitures are estimated based on historical experience.

(2) The expected life of stock options is estimated based on historical experience.

(3) Expected volatility is based on the average of historical and implied volatility. The historical volatility is determined by observing actual prices of the Company's stock over a period commensurate with the expected life of the awards. The implied volatility represents the implied volatility of the Company's call options, which are actively traded on multiple exchanges, had remaining maturities in excess of twelve months, had market prices close to the exercise prices of the employee stock options and were measured on the stock option grant date.

(4) Based on the U.S. Treasury constant maturity interest rate whose term is consistent with the expected life of the stock options.

(5) Expected dividend yield is estimated based on anticipated dividend payouts.

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Changes in the Company's stock options for the three months ended June 2, 2018 were as follows:

(Shares in thousands)	Number of Stock Options		Weighted Average Exercise Price
Options outstanding, beginning of period	4,241		$	55.76
Granted	1,065		16.85
Exercised	—		—
Forfeited or expired	(432	)	45.20
Options outstanding, end of period	4,874		$	48.19
Options exercisable, end of period	2,691		$	61.05

The weighted average fair value for the stock options granted during the first three months of fiscal 2018 and 2017 was $4.31 and $9.50, respectively. The weighted average remaining contractual term and the aggregate intrinsic value for options outstanding as of June 2, 2018 was 4.8 years and $1.0 million, respectively. The weighted average remaining contractual term for options exercisable as of June 2, 2018 was 3.1 years and the aggregate intrinsic value was $0. There were no stock options exercised during the first three months of fiscal 2018. The total intrinsic value for stock options exercised during the first three months of fiscal 2017 was $3.9 million.

Restricted Stock

Restricted stock awards are issued and measured at fair market value on the date of grant and generally become vested in five to seven equal annual installments beginning one to three years from the date of grant, subject, in general, to the recipient remaining in the Company's service on specified vesting dates. Vesting of restricted stock is based solely on time vesting. As of June 2, 2018, unrecognized compensation expense related to the unvested portion of the Company's restricted stock awards was $134.6 million, which is expected to be recognized over a weighted average period of 4.5 years.

Changes in the Company's restricted stock for the three months ended June 2, 2018 were as follows:

(Shares in thousands)	Number of Restricted Shares		Weighted Average Grant-Date Fair Value
Unvested restricted stock, beginning of period	4,311		$	48.07
Granted	476		17.64
Vested	(518	)	61.39
Forfeited	(93	)	44.76
Unvested restricted stock, end of period	4,176		$	43.02

Performance Stock Units

Performance stock units ("PSUs") are issued and measured at fair market value on the date of grant. Vesting of PSUs awarded to certain of the Company's executives is dependent on the Company's achievement of a performance-based test during a one-year period from the date of grant and during a three-year period from the date of grant and, assuming achievement of the performance-based test, time vesting over periods of up to four years, subject, in general, to the executive remaining in the Company's service on specified vesting dates. Performance during the one-year period will be based on Earnings Before Interest and Taxes ("EBIT") margin relative to a peer group of the Company and performance during the three-year period will be based on Return on Invested Capital ("ROIC") or a combination of EBIT margin and ROIC relative to such peer group. The awards based on EBIT margin and ROIC range from a floor of zero to a cap of 150% of target achievement. PSUs are converted into shares of common stock upon payment following vesting. Upon grant of the PSUs, the Company recognizes compensation expense related to these awards based on the assumption that 100% of the target award will be achieved. The Company evaluates the target assumption on a quarterly basis and adjusts compensation expense related to these awards, as appropriate. As of June 2, 2018, unrecognized compensation expense related to the unvested portion of the Company's performance stock units was $34.9 million, which is expected to be recognized over a weighted average period of 2.1 years.

Changes in the Company's PSUs for the three months ended June 2, 2018 were as follows:

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(Shares in thousands)	Number of Performance Stock Units		Weighted Average Grant-Date Fair Value
Unvested performance stock units, beginning of period	1,352		$	46.06
Granted	1,253		16.85
Vested	(492	)	50.82
Forfeited	—		—
Unvested performance stock units, end of period	2,113		$	27.63

12) Earnings per Share

The Company presents earnings per share on a basic and diluted basis. Basic earnings per share has been computed by dividing net earnings by the weighted average number of shares outstanding. Diluted earnings per share has been computed by dividing net earnings by the weighted average number of shares outstanding, including the dilutive effect of stock-based awards as calculated under the treasury stock method.

Stock-based awards of approximately 8.5 million and 7.2 million shares were excluded from the computation of diluted earnings per share as the effect would be anti-dilutive for the three months ended June 2, 2018 and May 27, 2017, respectively.

13) Supplemental Cash Flow Information

The Company paid income taxes of $3.2 million and $8.7 million in the first three months of fiscal 2018 and 2017, respectively. In addition, the Company had interest payments of approximately $2.2 million in both the first three months of fiscal 2018 and 2017.

The Company recorded an accrual for capital expenditures of $28.0 million and $34.1 million as of June 2, 2018 and May 27, 2017, respectively. In addition, the Company recorded an accrual for dividends payable of $26.3 million and $23.6 million as of June 2, 2018 and May 27, 2017, respectively.

14) Acquisition

On March 6, 2017, the Company acquired Decorist, Inc., an online interior design platform that provides personalized home design services. Since the date of acquisition, the results of Decorist's operations, which were not material, have been included in the Company's results of operations and no proforma disclosure of financial information has been presented. Decorist is included in the North American Retail operating segment.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

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 ("BBB"), Christmas Tree Shops, Christmas Tree Shops andThat! or andThat! (collectively, "CTS"), Harmon, Harmon Face Values, or Face Values (collectively, "Harmon"), buybuy BABY ("Baby") and World Market, Cost Plus World Market, or Cost Plus (collectively, "Cost Plus World Market"). 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 ("PMall"), an industry-leading online retailer of personalized products; Chef Central, a 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 accounts for its operations as two operating segments: North American Retail and Institutional Sales. The Institutional Sales operating segment, which is comprised of Linen Holdings, does not meet the quantitative thresholds under U.S. generally accepted accounting principles and therefore is not a reportable segment.

The Company's mission is to be trusted by its customers as the expert for the home and heart-felt life events. These include certain life events that evoke strong emotional connections such as getting married, moving to a new home, having a baby, going to college and decorating a room, which the Company supports through its wedding and baby registries, mover and student life programs, and its design consultation services. The Company's ability to achieve its mission is driven by three broad objectives: first, to present a meaningfully differentiated and complete product assortment for the home, of the right quality, at the right value; second, to provide services and solutions that enhance the usage and enjoyment of its offerings; and third, to deliver a convenient, engaging, and inspiring shopping experience that is intelligently personalized over time. The Company is undertaking a number of strategic initiatives to support each of these objectives, as well as to drive change across the organization in order to improve operational efficiencies and to create future growth. Through this focused approach, the Company believes it will further its efforts to be trusted as the expert for the home and heart-felt life events.

The integration of retail store and customer facing digital channels allows the Company to provide its customers with a seamless shopping experience. In-store purchases are primarily fulfilled from that store's inventory, or may also be shipped to a customer from one of the Company's distribution facilities, from a vendor, or from another store. Purchases, including web and mobile, can be shipped to a customer from the Company's distribution facilities, directly from vendors, or from a store. The Company's customers can also choose to pick up online orders in a store, as well as return online purchases to a store. Customers can also make purchases through one of the Company's customer contact centers and in-store through The Beyond Store, the Company's proprietary, web-based platform. These capabilities allow the Company to better serve customers across various channels.

Operating in the highly competitive retail industry, the Company, along with other retail companies, is influenced by a number of factors including, but not limited to: general economic conditions including the housing market, unemployment levels and commodity prices; the overall macroeconomic environment and related changes in the retailing environment; consumer preferences, spending habits and adoption of new technologies; unusual weather patterns and natural disasters; competition from existing and potential competitors across all channels; potential supply chain disruption; the ability to find suitable locations at acceptable occupancy costs and other terms to support the Company's plans for new stores; and the ability to assess and implement technologies in support of the Company's development of its omnichannel capabilities. The Company cannot predict whether, when or the manner in which these factors could affect the Company's operating results.

The following represents an overview of the Company's financial performance for the periods indicated:

• Net sales for the three months ended June 2, 2018 were $2.754 billion, an increase of approximately 0.4% as compared with the three months ended May 27, 2017.

• Comparable sales for the three months ended June 2, 2018 decreased by approximately 0.6%, as compared to a decrease of approximately 2.0% for the three months ended May 27, 2017. For the three months ended June 2, 2018, comparable

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sales consummated through customer facing digital channels continued to have strong growth over the corresponding period in the prior year, while comparable sales consummated in-store declined in the mid-single-digit percentage range.

Comparable sales include sales consummated through all retail channels which have been operating for twelve full months following the opening period (typically four to six weeks). The Company is an omnichannel retailer with capabilities that allow a customer to use more than one channel when making a purchase, including in-store, online, with a mobile device or through a customer contact center, and have it fulfilled, in most cases, either through in-store customer pickup or by direct shipment to the customer from one of the Company's distribution facilities, stores or vendors.

Sales consummated on a mobile device while physically in a store location are recorded as customer facing digital channel sales. Customer orders taken in-store by an associate through The Beyond Store, the Company's proprietary, web-based platform are recorded as in-store sales. Customer orders reserved online and picked up in a store are recorded as in-store sales. Sales originally consummated from customer facing digital channels and subsequently returned in-store are recorded as a reduction of in-store sales.

Stores relocated or expanded are excluded from comparable sales if the change in square footage would cause meaningful disparity in sales over the prior period. In the case of a store to be closed, such store’s sales are not considered comparable once the store closing process has commenced. Stores impacted by unusual and unexpected events outside the Company’s control, including severe weather, fire or floods, are excluded from comparable sales for the period of time that such event would cause a meaningful disparity in sales over the prior period. PMall is included in the comparable sales calculation in the fourth quarter of fiscal 2017. One Kings Lane, Chef Central and Decorist are included in the comparable sales calculation in the first quarter of fiscal 2018. Linen Holdings is excluded from the comparable sales calculations and will continue to be excluded on an ongoing basis as it represents non-retail activity.

• Gross profit for the three months ended June 2, 2018 was $964.8 million, or 35.0% of net sales, compared with $1.0 billion, or 36.5% of net sales, for the three months ended May 27, 2017.

• Selling, general and administrative expenses ("SG&A") for the three months ended June 2, 2018 were $883.6 million, or 32.1% of net sales, compared with $853.1 million, or 31.1% of net sales, for the three months ended May 27, 2017.

• Interest expense, net for the three months ended June 2, 2018 was $16.7 million compared with $16.6 million for the three months ended May 27, 2017.

• The effective tax rate for the three months ended June 2, 2018 was 32.4%, as compared with 42.3% for the three months ended May 27, 2017. The decrease in the effective tax rate was primarily due to the reduction of the U.S. federal corporate income tax rate due to the enactment of the Tax Cuts and Jobs Act (the “Tax Act”). The tax rates included discrete tax items resulting in net after tax costs of approximately $3.4 million and $5.6 million for the three months ended June 2, 2018 and May 27, 2017, respectively.

• For the three months ended June 2, 2018, net earnings per diluted share were $0.32 ($43.6 million), as compared with net earnings per diluted share of $0.53 ($75.3 million) for the three months ended May 27, 2017. The decrease in net earnings per diluted share for the three months ended June 2, 2018 is the result of the decrease in net earnings due to the items described above, partially offset by the impact of the Company's repurchases of its common stock. For the three months ended June 2, 2018, net earnings per diluted share included the unfavorable impact of severance costs incurred during the period of approximately $0.06, partially offset by the favorable impact of approximately $0.05 from the adoption of Accounting Standard Update 2014-09, Revenue from Contracts with Customers (Topic 606).

Capital expenditures for the three months ended June 2, 2018 and May 27, 2017 were $97.8 million and $80.8 million, respectively. In the first three months of fiscal 2018, approximately 80% of the capital expenditures were for technology projects, including investments in the Company's digital capabilities, and the development and deployment of new systems and equipment in its stores. The remaining capital expenditures were primarily related to investments in stores. The Company continues to review and prioritize its capital needs and remains committed to making the required investments in its infrastructure to help position the Company for continued growth and success.

The Company continues to make the investments and add the resources necessary to position itself for long-term success. Key areas of investment include: continuing to improve the presentation and content as well as the functionality, general search and navigation across its customer facing digital channels; improving customer data integration and customer relations management capabilities; continuing to enhance service offerings to its customers; continuing to strengthen and deepen its information technology, analytics, marketing and e-commerce groups; and creating more flexible fulfillment options that will improve the

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Company's delivery capabilities and lower the Company's shipping costs. These and other investments are expected to, among other things, provide a seamless and compelling customer experience across the Company's omnichannel retail platform.

During the three months ended June 2, 2018, the Company opened seven new stores and closed two stores. The Company plans to continue to actively manage its real estate portfolio in order to permit store sizes, layouts, locations and offerings to evolve over time to optimize market profitability and will renovate or reposition stores within markets when appropriate. Over the past several years, the Company's pace of its store openings has slowed, and the Company has increased the number of store closings. The Company has approximately 400 stores across its retail fleet that will come up for renewal at the natural lease expiration over the next two years, including approximately 270 BBB stores. In fiscal 2018, the Company expects to close approximately 40 stores, unless it is able to negotiate more favorable lease terms with its landlords, and open approximately 20 new stores, with the majority being Baby and Cost Plus World Market stores. Additionally, the Company expects to continue to invest in technology related projects, including the deployment of new systems and equipment in its stores, enhancements to the Company’s customer facing digital channels, ongoing investment in its data warehouse and data analytics and the continued deployment of a new point of sale system.

During fiscal 2016, the Company's Board of Directors authorized a quarterly dividend program. During the three months ended June 2, 2018 and May 27, 2017, total cash dividends of $21.4 million and $18.2 million were paid, respectively. Subsequent to the end of the first quarter of fiscal 2018, on June 27, 2018, the Company's Board of Directors 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 Company expects to pay quarterly cash dividends on its common stock in the future, subject to the determination by the Board of Directors, based on an evaluation of the Company's earnings, financial condition and requirements, business conditions and other factors.

During the three months ended June 2, 2018 and May 27, 2017, the Company repurchased approximately 1.2 million and 3.3 million shares, respectively, of its common stock at a total cost of approximately $22.1 million and $127.3 million, respectively. The Company's share repurchase program may be influenced by several factors, including business and market conditions. The Company reviews its alternatives with respect to its capital structure on an ongoing basis.

Results of Operations

Net Sales

Since fiscal 2017 was a fifty-three week year, fiscal 2018 started a calendar week later than fiscal 2017. The comparable sales calendar compares the same calendar weeks. The table below summarizes by fiscal quarter the time period for the financial reporting calendar and the comparable sales calendar. 

	Financial Reporting Calendar
	Fiscal 2018 (fifty-two weeks)	Fiscal 2017 (fifty-three weeks)
First Quarter	March 4, 2018 - June 2, 2018	February 26, 2017 - May 27, 2017
Second Quarter	June 3, 2018 - September 1, 2018	May 28, 2017 - August 26, 2017
Third Quarter	September 2, 2018 - December 1, 2018	August 27, 2017 - November 25, 2017
Fourth Quarter	December 2, 2018 - March 2, 2019	November 26, 2017 - March 3, 2018
	Comparable Sales Calendar
	Fiscal 2018 (fifty-two weeks)	Fiscal 2017 (fifty-three weeks)
First Quarter	March 4, 2018 - June 2, 2018	March 5, 2017 - June 3, 2017
Second Quarter	June 3, 2018 - September 1, 2018	June 4, 2017 - September 2, 2017
Third Quarter	September 2, 2018 - December 1, 2018	September 3, 2017 - December 2, 2017
Fourth Quarter	December 2, 2018 - March 2, 2019	December 3, 2017 - March 3, 2018

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Net sales for the three months ended June 2, 2018 were $2.754 billion, an increase of $11.5 million or approximately 0.4% over net sales of $2.742 billion for the corresponding quarter last year.

The decrease in comparable sales for the three months ended June 2, 2018 was approximately 0.6% as compared to a decrease of approximately 2.0% for the three months ended May 27, 2017. The decrease in comparable sales for the three months ended June 2, 2018 was due to a decrease in the number of transactions in stores, partially offset by an increase in the average transaction amount.

The Company's comparable sales metric considers sales consummated through all retail channels - in-store, online, with a mobile device or through a customer contact center. Customers today may take advantage of the Company's omnichannel environment by using more than one channel when making a purchase. The Company believes in an integrated and seamless customer experience. A few examples are: a customer may be assisted by an in-store associate to create a wedding or baby registry, while the guests may ultimately purchase a gift from the Company's websites; or a customer may research a particular item, and read other customer reviews on the Company's websites before visiting a store to consummate the actual purchase; or a customer may reserve an item online for in-store pick up; or while in a store, a customer may make the purchase on a mobile device for in home delivery from either a distribution facility, a store or directly from a vendor. In addition, the Company accepts returns in-store without regard to the channel in which the purchase was consummated, therefore resulting in reducing store sales by sales originally consummated through customer facing digital channels. As the Company's retail operations are integrated and it cannot reasonably track the channel in which the ultimate sale is initiated, the Company can however provide directional information on where the sale was consummated.

For the three months ended June 2, 2018, comparable sales consummated through customer facing digital channels continued to have strong growth over the corresponding period in the prior year, while comparable sales consummated in-store declined in the mid-single-digit percentage range.

For the three months ended June 2, 2018 and May 27, 2017, comparable sales represented $2.667 billion and $2.613 billion of net sales, respectively.

Domestics merchandise includes categories such as bed linens and related items, bath items and kitchen textiles. Home furnishings include categories such as kitchen and tabletop items, fine tabletop, basic housewares, general home furnishings (including furniture and wall décor), consumables and certain juvenile products. Sales of domestics merchandise and home furnishings accounted for approximately 36.0% and 64.0% of net sales, respectively, for the three months ended June 2, 2018 and approximately 36.2% and 63.8% of net sales, respectively, for the three months ended May 27, 2017.

Gross Profit

Gross profit for the three months ended June 2, 2018 was $964.8 million, or 35.0% of net sales, compared with $1.0 billion, or 36.5% of net sales, for the three months ended May 27, 2017. In order of magnitude, the decrease in the gross profit margin as a percentage of net sales for the three months ended June 2, 2018 was primarily attributed to increases in coupon expense and net direct to customer shipping expense. The increase in coupon expense was the result of an increase in the average coupon amount partially offset by a slight decrease in the number of redemptions.

Selling, General and Administrative Expenses

SG&A for the three months ended June 2, 2018 was $883.6 million, or 32.1% of net sales, compared with $853.1 million, or 31.1% of net sales, for the three months ended May 27, 2017. The increase in SG&A, as a percentage of net sales was primarily attributable to, in order of magnitude: an increase in payroll and payroll related items (including severance costs); an increase in technology expenses and related depreciation; and an increase in management consulting expenses, including costs related to the Company's merchandising improvement and marketing personalization initiatives.

Operating Profit

Operating profit for the three months ended June 2, 2018 was $81.2 million, or 2.9% of net sales, compared with $147.0 million, or 5.4% of net sales, during the comparable period last year. The changes in operating profit as a percentage of net sales were the result of the reductions in gross profit margin and the increases in SG&A as a percentage of net sales as described above.

The Company believes operating margin compression is likely to continue in fiscal 2018, however, it is expected to be less than the Company experienced in fiscal 2017. This is largely due to gross margin deleverage, primarily due to the Company's continued

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investment in its customer value proposition, and the ongoing shift to its digital channels, as well as SG&A deleverage primarily due to investments it is making to transform the Company.

Interest Expense, net

Interest expense, net for the three months ended June 2, 2018 was $16.7 million compared to $16.6 million for the three months ended May 27, 2017.For the three months ended June 2, 2018 and May 27, 2017, interest expense, net primarily related to interest on the senior unsecured notes issued in July 2014.

Income Taxes

The effective tax rate for the three months ended June 2, 2018 was 32.4% compared with 42.3% for the three months ended May 27, 2017. The decrease in the effective tax rate was primarily due to the reduction of the U.S. federal corporate income tax rate due to the enactment of the Tax Act. The tax rate for the three months ended June 2, 2018 and May 27, 2017 included net after tax costs of approximately $3.4 million and $5.6 million, respectively, due to discrete federal and state tax items occurring during these quarters.

Potential volatility in the effective tax rate from year to year may occur as the Company is required each year to determine whether new information changes the assessment of both the probability that a tax position will effectively be sustained and the appropriateness of the amount of recognized benefit. 

Net Earnings

As a result of the factors described above, net earnings for the three months ended June 2, 2018 were $43.6 million, compared with $75.3 million for the corresponding period in fiscal 2017.

Growth

In the 25-year period from the beginning of fiscal 1992 to the end of the first quarter of fiscal 2018, the Company has grown from 34 stores to 1,557 stores plus the Company's interactive platforms, including websites and applications, and distribution facilities. Total store square footage, net of openings and closings, grew from approximately 0.9 million square feet at the beginning of fiscal 1992 to approximately 43.8 million square feet at the end of the first quarter of fiscal 2018. Over the past several years, sales from the Company’s customer facing digital channels have continued to experience strong growth.

In addition, as of June 2, 2018, the Company has distribution facilities totaling approximately 7.2 million square feet, supporting the growth of its customer facing digital channels as well as its stores and its institutional sales segment.

Over the next several years, the Company expects to make heavy investments in people, processes and technology as it continues the evolution of its foundational structure to support its mission to be trusted by its customers as the expert for the home and heart-felt life events.

The Company expects company-wide to open approximately 20 new stores, and close approximately 40 stores in fiscal 2018, unless it can negotiate more favorable lease terms with landlords. Additionally, in connection with leveraging its merchandise offerings and optimizing its operations, the Company continues to expand, across selected stores, the number of specialty departments such as health and beauty care, baby, specialty food, and beverage. Also, the Company is committed to the continued growth of its merchandise categories and channels and is growing the number of items it is able to have shipped directly to customers from a vendor. The continued growth of the Company is dependent, in part, upon the Company’s ability to execute these and other key initiatives successfully.

The Company has built its management structure with a view towards its growth and believes that, as a result, it has the necessary management depth.

Liquidity and Capital Resources

The Company has been able to finance its operations, including its growth and acquisitions, substantially through internally generated funds. The Company ended the first quarter of fiscal 2018 in a strong cash position, which it anticipates maintaining, to provide the Company the flexibility to fund its ongoing initiatives and act upon other opportunities that may arise. As of June 2, 2018, the Company had approximately $847 million in cash and investment securities, an increase of approximately $281 million compared with the corresponding period in fiscal 2017. For fiscal 2018, the Company believes that it can continue to finance its

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operations, including its growth, planned capital expenditures, debt service obligations, cash dividends, and share repurchases, through existing and internally generated funds. In addition, if necessary, the Company could borrow under its $250 million revolving credit facility or the available balances under its lines of credit. Capital expenditures for fiscal 2018 are planned to be approximately $375 million to $425 million, subject to the timing and composition of projects. In addition, the Company reviews its alternatives with respect to its capital structure on an ongoing basis.

Fiscal 2018 compared to Fiscal 2017

Net cash provided by operating activities for the three months ended June 2, 2018 was $245.0 million, compared with $204.6 million in the corresponding period in fiscal 2017. Year over year, the Company experienced an increase in cash provided by the net components of working capital (primarily merchandise inventories and other current assets, partially offset by accounts payable, income taxes payable and accrued expenses), partially offset by a decrease in net earnings.

Retail inventory, which includes inventory in the Company’s distribution facilities for direct to customer shipments, was approximately $2.6 billion at June 2, 2018, a decrease of approximately 10.3% compared to retail inventory at May 27, 2017. The percentage decrease was due, in part, to the favorable impact of the Company’s inventory optimization strategies.

Net cash provided by investing activities for the three months ended June 2, 2018 was $134.7 million, compared with net cash used in investing activities of $85.1 million in the corresponding period of fiscal 2017. For the three months ended June 2, 2018, net cash provided by investing activities was primarily due to $238.1 million of redemptions of investment securities, partially offset by $97.8 million of capital expenditures. For the three months ended May 27, 2017, net cash used in investing activities was primarily due to $80.8 million of capital expenditures.

Net cash used in financing activities for the three months ended June 2, 2018 was $43.5 million, compared with $135.3 million in the corresponding period of fiscal 2017. The decrease in net cash used in financing activities was primarily due to a decrease in common stock repurchases of $105.2 million.

Seasonality

The Company's business is subject to seasonal influences. Generally, its sales volumes are higher in the calendar months of August, November and December, and lower in February.

Critical Accounting Policies

See "Critical Accounting Policies" under Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended March 3, 2018 ("2017 Form 10-K"), filed with the Securities and Exchange Commission ("SEC") and incorporated by reference herein. Except for the changes due to the adoption of ASU 2014-09 related to revenue recognition discussed in "Recent Accounting Pronouncements," Note 2, there were no changes to the Company's critical accounting policies during the first three months of fiscal 2018.

Forward-Looking Statements

This Form 10-Q 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 and investments; 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

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protecting consumer and employee information or other types of cybercrimes or cybersecurity attacks; reputational risk arising from challenges to the Company’s or a third party product or service 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.

Available Information

The Company makes available as soon as reasonably practicable after filing with the SEC, free of charge, through its website, www.bedbathandbeyond.com, the Company's annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, electronically filed or furnished pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The Company's exposure to market risk for changes in interest rates relates primarily to the Company's investment securities. The Company's market risks at June 2, 2018 are similar to those disclosed in Item 7A of the Company's 2017 Form 10-K.

As of June 2, 2018, the Company's investments include cash and cash equivalents of approximately $678.6 million, short-term investment securities of $59.9 million and long term investments in auction rate securities of approximately $19.9 million at weighted average interest rates of 1.32%, 1.46% and 0.15%, respectively. The book value of these investments is representative of their fair values.

The Company's senior unsecured notes have fixed interest rates and are not subject to interest rate risk. As of June 2, 2018, the fair value of the senior unsecured notes was $1.192 billion, which is based on quoted prices in active markets for identical instruments compared to the carrying value of approximately $1.500 billion.

Item 4. Controls and Procedures

(a) Disclosure Controls and Procedures

The Company's management, with the participation of its Principal Executive Officer and Principal Financial Officer, have reviewed and evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Exchange Act Rules 240.13a-15(e) and 15d-15(e)) as of June 2, 2018 (the end of the period covered by this quarterly report on Form 10-Q). Based on that evaluation, the Principal Executive Officer and the Principal Financial Officer have concluded that the Company's current disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and (ii) accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, to allow timely decisions regarding required disclosure.

(b) Changes in Internal Control over Financial Reporting

There were no changes in the Company's internal controls over financial reporting that occurred during the Company's most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal controls over financial reporting.

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PART II - OTHER INFORMATION

Item1. Legal Proceedings

The Company is party to various legal proceedings arising in the ordinary course of business, which the Company does not believe to be material to the Company's business or financial condition.

Item1A. Risk Factors

In addition to the other information set forth in this Form 10-Q, carefully consider the factors discussed under "Risk Factors" in the Company's 2017 Form 10-K as filed with the Securities and Exchange Commission. These risks could materially adversely affect the Company's business, financial condition and results of operations. These risks are not the only risks the Company faces. The Company's operations could also be affected by additional factors that are not presently known to the Company or by factors that the Company currently considers immaterial to its business.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The Company's purchases of its common stock during the first quarter of fiscal 2018 were as follows:

Period	Total Number of Shares Purchased (1)	Average Price Paid per Share (2)		Total Number of Shares Purchased as Part of Publicly or Programs (1) Announced Plans	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)(2)
March 4, 2018 - March 31, 2018	177,600	$	21.55	177,600	$	1,480,385,605
April 1, 2018 - April 28, 2018	174,600	$	18.44	174,600	$	1,477,165,205
April 29, 2018 - June 2, 2018	861,800	$	17.48	861,800	$	1,462,103,278
Total	1,214,000	$	18.21	1,214,000	$	1,462,103,278

(1) Between December 2004 and September 2015, the Company's Board of Directors authorized, through several share repurchase programs, the repurchase of $11.950 billion of its shares of common stock. The Company has authorization to make repurchases from time to time in the open market or through other parameters approved by the Board of Directors pursuant to existing rules and regulations. Shares purchased, as indicated in this table, also include shares withheld to cover employee related taxes on vested restricted shares and performance stock unit awards.

(2) Excludes brokerage commissions paid by the Company.         

Item 6. Exhibits

The exhibits to this Report are included herein. 

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Exhibit No.	Exhibit
10.1* **	Voluntary salary waiver between the Company and Steven H. Temares (dated as of May 14, 2018)
10.2*	Form of Standard Performance Stock Unit Agreement under 2012 Incentive Compensation Plan (effective 2017 and 2018) (incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q filed with the Commission on June 30, 2017)
10.3*	Form of Performance Stock Unit Agreement under 2012 Incentive Compensation Plan (effective 2017 and 2018) for Steven H. Temares (incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q filed with the Commission on June 30, 2017)
31.1**	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2**	Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32**	Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document

________________

*	This is a management contract or compensatory plan or arrangement.
**	Filed herewith.

-24-

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: July 6, 2018	By:	/s/ Robyn M. D'Elia
		Robyn M. D'Elia
		Chief Financial Officer and Treasurer
		(Principal Financial and Accounting Officer)

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EX-10.1

Exhibit 10.1

May 14, 2018

Bed Bath & Beyond Inc.

650 Liberty Avenue

Union, NJ 07083

Attention:     Compensation Committee of the Board of Directors

of Bed Bath & Beyond Inc. (the “Company”)

Dear Committee Members:

Effective with the payroll period beginning May 13, 2018 (“Effective Date”), I hereby voluntarily waive $500,000 of my salary for the one year period commencing on the Effective Date, which amount shall be subtracted in substantially equal installments from my regular salary payments covering such one year period. Notwithstanding the foregoing, this waiver shall be disregarded and my salary will be deemed unchanged from its current salary amount for all other purposes, including for purposes of my employment agreement with the Company, dated as of December 1, 1994, as amended (including, without limitation, for purposes of the calculation of severance payments thereunder), and my letter agreement with the Company, dated November 16, 2009, with respect to my supplemental executive retirement plan benefit (including, without limitation, for purposes of the calculation of the Retirement Benefit thereunder). For the avoidance of doubt, the current severance under my employment agreement and the current Retirement Benefit under my SERP will not be reduced as a result of this voluntary salary waiver. I also acknowledge that: (i) my waiver does not confer on me any additional rights under any of my agreements with the Company; and (ii) except with respect to my waiver for the one year period following the Effective Date as described above, my employment agreement and other agreements with the Company shall remain in full force and effect, which employment agreement and other agreements shall not be deemed to be amended or supplemented in any way.

Sincerely yours,

/s/ Steven H. Temares

Steven H. Temares

THE FOREGOING WAIVER LETTER IS HEREBY ACCEPTED AND AGREED TO:

BED BATH & BEYOND INC.

By:    /s/ Warren Eisenberg

Name:    Warren Eisenberg, Co-Chairman

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Steven H. Temares, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Bed Bath & Beyond Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: July 6, 2018	/s/ Steven H. Temares
	Steven H. Temares
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Robyn M. D'Elia, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Bed Bath & Beyond Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: July 6, 2018	/s/ Robyn M. D'Elia
	Robyn M. D'Elia
	Chief Financial Officer and Treasurer
	(Principal Financial and Accounting Officer)

EX-32

Exhibit 32

CERTIFICATION

The undersigned, the Principal Executive Officer and Principal Financial Officer of Bed Bath & Beyond Inc. (the "Company"), hereby certify, to the best of their knowledge and belief, that the Form 10-Q of the Company for the quarterly period ended June 2, 2018, (the "Periodic Report") accompanying this certification fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) and that the information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company. The foregoing certification is provided solely for purposes of complying with the provisions of Section 906 of the Sarbanes - Oxley Act of 2002 and is not intended to be used for any other purposes.

Date: July 6, 2018	/s/ Steven H. Temares
	Steven H. Temares
	Chief Executive Officer
	/s/ Robyn M. D'Elia
	Robyn M. D'Elia
	Chief Financial Officer and Treasurer
	(Principal Financial and Accounting Officer)

XML

Document And Entity Information	3 Months Ended
	Jun. 02, 2018 shares
Document Information [Line Items]
Entity Registrant Name	BED BATH & BEYOND INC
Entity Central Index Key	0000886158
Trading Symbol	bbby
Current Fiscal Year End Date	--03-02
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding	140,131,005
Document Type	10-Q
Document Period End Date	Jun. 02, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 02, 2018	Mar. 03, 2018
Current assets:
Cash and cash equivalents	$ 678,646	$ 346,140
Short term investment securities	148,313	378,039
Merchandise inventories	2,646,263	2,730,874
Prepaid expenses and other current assets	483,159	516,025
Total current assets	3,956,381	3,971,078
Long term investment securities	19,957	19,517
Property and equipment, net	1,893,230	1,909,289
Goodwill	716,283	716,283
Other assets	427,895	424,639
Total assets	7,013,746	7,040,806
Current liabilities:
Accounts payable	1,082,943	1,197,504
Accrued expenses and other current liabilities	716,069	633,100
Merchandise credit and gift card liabilities	329,055	335,081
Total current liabilities	2,128,067	2,165,685
Deferred rent and other liabilities	431,799	431,592
Income taxes payable	57,507	62,823
Long term debt	1,492,194	1,492,078
Total liabilities	4,109,567	4,152,178
Shareholders' equity:
Preferred stock - $0.01 par value; authorized - 1,000 shares; no shares issued or outstanding	0	0
Common stock - $0.01 par value; authorized - 900,000 shares; issued 342,642 and 341,795, respectively; outstanding 140,131 and 140,498 shares, respectively	3,426	3,418
Additional paid-in capital	2,082,238	2,057,975
Retained earnings	11,360,572	11,343,503
Treasury stock, at cost; 202,511 and 201,297 shares, respectively	(10,490,082)	(10,467,972)
Accumulated other comprehensive loss	(51,975)	(48,296)
Total shareholders' equity	2,904,179	2,888,628
Total liabilities and shareholders' equity	$ 7,013,746	$ 7,040,806

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands	Jun. 02, 2018	Mar. 03, 2018
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	1,000	1,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	900,000	900,000
Common stock, shares issued (in shares)	342,642	341,795
Common stock, shares outstanding (in shares)	140,131	140,498
Treasury stock, shares (in shares)	199,269	193,259

XML

Consolidated Statements of Earnings - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Jun. 02, 2018	May 27, 2017
Income Statement [Abstract]
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		$ 0.53
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	$ 0.16	$ 0.150

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Jun. 02, 2018	May 27, 2017
Statement of Comprehensive Income [Abstract]
Net earnings	$ 43,576	$ 75,283
Other comprehensive income (loss):
Change in temporary impairment of auction rate securities, net of taxes	315	166
Pension adjustment, net of taxes	136	199
Currency translation adjustment	(4,130)	(5,838)
Other comprehensive loss	(3,679)	(5,473)
Comprehensive income	$ 39,897	$ 69,810

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Jun. 02, 2018	May 27, 2017
Net Cash Provided by (Used in) Operating Activities, Continuing Operations [Abstract]
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
Decrease (increase) 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)	0
Redemption of held-to-maturity investment securities	238,125	0
Capital expenditures	(97,813)	(80,760)
Payment for acquisition, net of cash acquired	0	(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	0	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

XML

Basis of Presentation

3 Months Ended

Jun. 02, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying consolidated financial statements have been prepared without audit. In the opinion of management, the accompanying consolidated financial statements contain all adjustments (consisting of only normal recurring accruals and elimination of intercompany balances and transactions) necessary to present fairly the financial position of Bed Bath & Beyond Inc. and subsidiaries (the "Company") as of June 2, 2018 and March 3, 2018 and the results of its operations, comprehensive income and cash flows for the three months ended June 2, 2018 and May 27, 2017, respectively.

The accompanying unaudited consolidated financial statements are presented in accordance with the requirements for Form 10-Q and consequently do not include all the disclosures normally required by U.S. generally accepted accounting principles ("GAAP"). Reference should be made to Bed Bath & Beyond Inc.'s Annual Report on Form 10-K for the fiscal year ended March 3, 2018 for additional disclosures, including a summary of the Company's significant accounting policies, and to subsequently filed Form 8-Ks.

The Company accounts for its operations as two operating segments: North American Retail and Institutional Sales. The Institutional Sales operating segment, which is comprised of Linen Holdings, does not meet the quantitative thresholds under GAAP and therefore is not a reportable segment. Net sales outside of the U.S. for the Company were not material for the three months ended June 2, 2018 and May 27, 2017. As the Company operates in the retail industry, its results of operations are affected by general economic conditions and consumer spending habits.

XML

Recent Accounting Pronouncements

3 Months Ended

Jun. 02, 2018

Accounting Policies [Abstract]

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606). This guidance requires an entity to recognize revenue in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard also will result in enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In July 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. This guidance deferred the effective date of ASU 2014-09 for one year from the original effective date. In accordance with the deferral, ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. In 2016, the FASB issued several amendments to clarify various aspects of the implementation guidance. ASU 2014-09 can be adopted either retrospectively to each prior reporting period presented or as a cumulative-effect adjustment as of the date of adoption.  At the beginning of the first quarter of fiscal 2018, the Company adopted ASU 2014-09 using the modified retrospective transition method and recognized the cumulative effect of applying this standard to opening retained earnings. The Company recorded a net after-tax reduction to opening retained earnings of approximately $4.2 million as of March 4, 2018. The comparative financial information has not been adjusted and continues to be reported under ASC Topic 605, Revenue Recognition (Topic 605).

The majority of the Company’s revenue is generated from the sale of product in its retail stores, which will continue to be recognized when control of the product is transferred to the customer. The adoption of ASU 2014-09 resulted in the following changes:

• A change in the timing of recognizing advertising expense related to direct response advertising. These costs that were previously expensed over the period during which the sales were expected to occur will now be expensed on the first day of the direct response advertising event.

• A change in the presentation of the sales return reserve on the consolidated balance sheet, as estimated costs of returns will be recorded as a current asset rather than netted with the sales return reserve.

• Changes in the presentation of certain other revenue streams on the consolidated statement of earnings between net sales, cost of sales, and selling, general and administrative expenses.

The below tables set forth the adjustments to the Company’s consolidated statement of earnings and consolidated balance sheet as a result of the newly adopted revenue recognition standard.

	Three months ended June 2, 2018
(In thousands)	As Reported		Balances Without Adoption of ASU 2014-09		Impact of Adoption Increase/(Decrease)
Net sales	$	2,753,667	$	2,755,312	$	(1,645	)
Cost of sales	1,788,819		1,795,164		(6,345		)
Gross profit	964,848		960,148		4,700
Selling, general and administrative expenses	883,619		888,154		(4,535		)
Operating profit	81,229		71,994		9,235
Interest expense, net	16,732		16,732		—
Earnings before provision for income taxes	64,497		55,262		9,235
Provision for income taxes	20,921		18,590		2,331
Net earnings	$	43,576	$	36,672	$	6,904
Net earnings per share - Diluted	$	0.32	$	0.27	$	0.05

	June 2, 2018
(In thousands)	As Reported		Balances Without Adoption of ASU 2014-09		Impact of Adoption Increase/(Decrease)
Assets
Merchandise inventories	$	2,646,263	$	2,648,181	$	(1,918	)
Prepaid expenses and other current assets	483,159		378,516		104,643
Liabilities and Shareholders' Equity
Accrued expenses and other current liabilities	716,069		605,137		110,932
Merchandise credit and gift card liabilities	329,055		339,945		(10,890		)
Retained earnings	11,360,572		11,357,889		2,683

The Company expects the impact of the adoption of the new standard to be immaterial to the Company's full year fiscal 2018 consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. ASU 2017-01 requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of identifiable assets, the set of assets would not represent a business. Also, in order to be considered a business, an acquisition would have to include an input and a substantive process that together significantly contribute to the ability to produce outputs. Under the update, fewer sets of assets are expected to be considered businesses. ASU 2017-01 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The Company adopted this guidance at the beginning of the first quarter of fiscal 2018 and it did not have a material effect on the Company's consolidated financial position, results of operations, or cash flows.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This guidance requires an entity to recognize lease liabilities and a right-of-use asset for all leases on the balance sheet and to disclose key information about the entity's leasing arrangements. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, with earlier adoption permitted. ASU 2016-02 must be adopted using a modified retrospective approach for all leases existing at, or entered into after the date of initial adoption, with an option to elect to use certain transition relief. The Company is currently evaluating the impact of this new standard on its consolidated financial statements and related disclosures, but expects that it will result in a significant increase in the assets and liabilities recorded on the consolidated balance sheet.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 eliminates the requirement to calculate the implied fair value of goodwill to measure the amount of impairment loss, if any, under the second step of the current goodwill impairment test. Under the update, the goodwill impairment loss would be measured as the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 is effective for annual reporting periods beginning after December 15, 2019, with early adoption permitted. The adoption of this guidance is not expected to have a significant effect on the Company's consolidated financial position, results of operations, or cash flows.

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Revenue Recognition

3 Months Ended

Jun. 02, 2018

Revenue Recognition and Deferred Revenue [Abstract]

Revenue Recognition

Revenue Recognition

Sales are recognized upon purchase by customers at the Company’s retail stores or upon delivery for products purchased from its websites. The value of point-of-sale coupons and point-of-sale rebates that result in a reduction of the price paid by the customer are recorded as a reduction of sales. Shipping and handling fees that are billed to a customer in a sale transaction are recorded in sales. Taxes, such as sales tax, use tax and value added tax, are not included in sales.

Revenues from gift cards, gift certificates and merchandise credits are recognized when redeemed. Gift cards have no provisions for reduction in the value of unused card balances over defined time periods and have no expiration dates. For the three months ended June 2, 2018, the Company recognized net sales for gift card and merchandise credit redemptions of approximately $54.0 million which were included in merchandise credit and gift card liabilities on the consolidated balance sheet as of March 3, 2018.

Sales returns are provided for in the period that the related sales are recorded based on historical experience. Although the estimate for sales returns has not varied materially from historical provisions, actual experience could vary from historical experience in the future if the level of sales return activity changes materially. In the future, if the Company concludes that an adjustment is required due to material changes in the returns activity, the liability for estimated returns and the corresponding right of return asset will be adjusted accordingly. As of June 2, 2018, the liability for estimated returns of $150.6 million is included in accrued expenses and other current liabilities and the corresponding right of return asset for merchandise of $108.8 million is included in prepaid expenses and other current assets.

The Company sells a wide assortment of domestics merchandise and home furnishings. Domestics merchandise includes categories such as bed linens and related items, bath items and kitchen textiles. Home furnishings include categories such as kitchen and tabletop items, fine tabletop, basic housewares, general home furnishings (including furniture and wall décor), consumables and certain juvenile products. Sales of domestics merchandise and home furnishings accounted for approximately 36.0% and 64.0% of net sales, respectively, for the three months ended June 2, 2018 and approximately 36.2% and 63.8% of net sales, respectively, for the three months ended May 27, 2017.

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Income Taxes

3 Months Ended

Jun. 02, 2018

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act significantly revised the U.S. tax code by, among other things, (i) reducing the federal corporate income tax rate, effective January 1, 2018, from 35% to 21%, (ii) imposing a one-time transition tax on earnings of foreign subsidiaries deemed to be repatriated and (iii) implementing a modified territorial tax system.

In March 2018, the FASB issued ASU 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to the Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin No. 118 (“SAB 118”). This update provides guidance on income tax accounting implications under the Tax Act. SAB 118 addressed the application of GAAP to situations when a registrant does not have the necessary information available, prepared or analyzed in reasonable detail to complete the accounting for certain income tax effects of the Tax Act and allows companies to record provisional amounts during a remeasurement period not to exceed one year after the enactment date while the accounting impact remains under analysis.

The Company has reasonably estimated the impact of the Tax Act in its fiscal 2017 provision for income taxes in accordance with its interpretation of the Tax Act and available guidance. The Tax Act resulted in a net unfavorable tax impact of approximately $10.5 million recorded in the fiscal fourth quarter of 2017.

During the three months ended June 2, 2018, the Company made no adjustments to previously recorded provisional amounts related to the Tax Act. The provisional amounts are related to the remeasurement of the Company’s net deferred tax assets and the transition tax on accumulated foreign earnings, which collectively totaled approximately $26.8 million. The Company believes the remeasurement of its net deferred tax assets is complete, except for changes in estimates that can result from finalizing the filing of its 2017 U.S. income tax return and changes that may be a direct impact of other provisional amounts due to the enactment of the Tax Act. The estimated transition tax was recorded based on the Company’s initial evaluation of the impact of the Tax Act and is subject to change during fiscal 2018 as the Company continues to refine, analyze and update the underlying data, computations and assumptions used to prepare this provisional amount during the measurement period. In addition, these estimates may be impacted as the Company further analyzes available tax accounting methods and elections, and state tax conformity to the federal tax changes and guidance issued by regulatory bodies that provide interpretive guidance of the Tax Act. Any adjustments to the provisional amounts will be recognized as a component of the provision for income taxes in the period in which such adjustments are determined within the annual period following the enactment of the Tax Act. Additionally, the Company continues to evaluate the Global Intangible Low-Taxed Income (“GILTI”) provisions of the Tax Act and the impact, if any, on its consolidated financial statements. As a result, the Company has not included any amount related to GILTI in its consolidated financial statements as of June 2, 2018.

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Fair Value Measurements

3 Months Ended

Jun. 02, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., "the exit price") in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various valuation approaches, including quoted market prices and discounted cash flows. The hierarchy for inputs used in measuring fair value maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect a company's judgment concerning the assumptions that market participants would use in pricing the asset or liability developed based on the best information available under the circumstances. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an asset or liability must be classified in its entirety based on the lowest level of input that is significant to the measurement of fair value. The fair value hierarchy is broken down into three levels based on the reliability of inputs as follows:

• Level 1 - Valuations based on quoted prices in active markets for identical instruments that the Company is able to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.

• Level 2 - Valuations based on quoted prices in active markets for instruments that are similar, or quoted prices in markets that are not active for identical or similar instruments, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

• Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

As of June 2, 2018, the Company's financial assets utilizing Level 1 inputs included short term trading investment securities traded on active securities exchanges. The Company did not have any financial assets utilizing Level 2 inputs. Financial assets utilizing Level 3 inputs included long term investments in auction rate securities consisting of preferred shares of closed end municipal bond funds (See "Investment Securities," Note 7). 

Fair Value of Financial Instruments

The Company's financial instruments include cash and cash equivalents, investment securities, accounts payable, long term debt and certain other liabilities. The Company's investment securities consist primarily of U.S. Treasury securities, which are stated at amortized cost, and auction rate securities, which are stated at their approximate fair value. The book value of the financial instruments, excluding the Company's long term debt, is representative of their fair values. The fair value of the Company's long term debt is approximately $1.192 billion as of June 2, 2018, which is based on quoted prices in active markets for identical instruments (i.e., Level 1 valuation), compared to the carrying value of approximately $1.500 billion.

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Cash and Cash Equivalents

3 Months Ended

Jun. 02, 2018

Cash and Cash Equivalents [Abstract]

Cash and Cash Equivalents

Cash and Cash Equivalents

Included in cash and cash equivalents are credit and debit card receivables from banks, which typically settle within five business days, of $95.5 million and $95.6 million as of June 2, 2018 and March 3, 2018, respectively.

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Investment Securities

3 Months Ended

Jun. 02, 2018

Investments, Debt and Equity Securities [Abstract]

Investment Securities

Investment Securities

The Company's investment securities as of June 2, 2018 and March 3, 2018 are as follows:

(in millions)	June 2, 2018		March 3, 2018
Available-for-sale securities:
Long term	$	19.9	$	19.4
Trading securities:
Short term	88.4		86.3
Held-to-maturity securities:
Short term	59.9		291.7
Total investment securities	168.2		397.4

Auction Rate Securities

As of June 2, 2018 and March 3, 2018, the Company's long term available-for-sale investment securities represented approximately $20.3 million par value of auction rate securities consisting of preferred shares of closed end municipal bond funds, less temporary valuation adjustments of approximately $0.4 million and $0.9 million, respectively. Since these valuation adjustments are deemed to be temporary, they are recorded in accumulated other comprehensive loss, net of a related tax benefit, and did not affect the Company's net earnings.

U.S. Treasury Securities

As of June 2, 2018 and March 3, 2018, the Company’s short term held-to-maturity securities included approximately $59.9 million and $291.7 million of U.S. Treasury Bills with remaining maturities of less than one year, respectively. These securities are stated at their amortized cost which approximates fair value, which is based on quoted prices in active markets for identical instruments (i.e., Level 1 valuation).

Trading Investment Securities

The Company's trading investment securities, which are provided as investment options to the participants of the nonqualified deferred compensation plan (“NQDC”), are stated at fair market value. The values of these trading investment securities included in the table above are approximately $88.4 million and $86.3 million as of June 2, 2018 and March 3, 2018, respectively.

On December 27, 2017, the Company terminated its NQDC. After December 27, 2017, no participant deferrals will be accepted and all balances will be liquidated more than 12 months but less than 24 months after December 27, 2017. Until the final payment date, the NQDC will continue to operate in the ordinary course, except that no new participant deferrals will be credited to participant accounts under the NQDC.

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Property and Equipment

3 Months Ended

Jun. 02, 2018

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and Equipment

As of June 2, 2018 and March 3, 2018, included in property and equipment, net is accumulated depreciation of approximately $3.2 billion and $3.1 billion, respectively.

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Long Term Debt

3 Months Ended

Jun. 02, 2018

Debt Disclosure [Abstract]

Long Term Debt

Long Term Debt

Senior Unsecured Notes

On July 17, 2014, the Company issued $300 million aggregate principal amount of 3.749% senior unsecured notes due August 1, 2024, $300 million aggregate principal amount of 4.915% senior unsecured notes due August 1, 2034 and $900 million aggregate principal amount of 5.165% senior unsecured notes due August 1, 2044 (collectively, the "Notes"). Interest on the Notes is payable semi-annually on February 1 and August 1 of each year.

The Notes were issued under an indenture (the "Base Indenture"), as supplemented by a first supplemental indenture (together, with the Base Indenture, the "Indenture"), which contains various restrictive covenants, which are subject to important limitations and exceptions that are described in the Indenture. The Company was in compliance with all covenants related to the Notes as of June 2, 2018.

Revolving Credit Agreement

On November 14, 2017, the Company replaced its existing $250 millionfive year senior unsecured revolving credit facility agreement with various lenders with a new $250 millionfive year senior unsecured revolving credit facility agreement ("Revolver") with various lenders maturing November 14, 2022. The new Revolver has essentially the same terms and requirements as the prior revolving credit facility agreement. During the three months ended June 2, 2018, the Company did not have any borrowings under the Revolver.

The Revolver contains customary affirmative and negative covenants and also requires the Company to maintain a maximum leverage ratio. The Company was in compliance with all covenants related to the Revolver as of June 2, 2018.

Deferred financing costs associated with the Notes and the revolving credit facilities of approximately $10.5 million were capitalized. In the accompanying Consolidated Balance Sheets, the deferred financing costs are included in long term debt, net of amortization, for the Notes, and are included in other assets, net of amortization, for the Revolver. These deferred financing costs for the Notes and the Revolver are being amortized over the term of each of the Notes and the term of the Revolver and such amortization is included in interest expense, net in the Consolidated Statements of Earnings. Interest expense related to the Notes and the revolving credit facilities, including the commitment fee and the amortization of deferred financing costs, was approximately $18.2 million for both the three months ended June 2, 2018 and May 27, 2017.

Lines of Credit

At June 2, 2018, the Company maintained two uncommitted lines of credit of $100 million each, with expiration dates of August 29, 2018 and February 24, 2019, respectively. These uncommitted lines of credit are currently and are expected to be used for letters of credit in the ordinary course of business. During the first three months of fiscal 2018, the Company did not have any direct borrowings under the uncommitted lines of credit. Although no assurances can be provided, the Company intends to renew both uncommitted lines of credit before the respective expiration dates.

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Shareholders' Equity

3 Months Ended

Jun. 02, 2018

Stockholders' Equity Note [Abstract]

Stockholders Equity

Shareholders Equity

The Company has authorization to make repurchases from time to time in the open market or through other parameters approved by the Board of Directors pursuant to existing rules and regulations.

Between December 2004 and September 2015, the Company's Board of Directors authorized, through several share repurchase programs, the repurchase of $11.950 billion of its shares of common stock. The Company also acquires shares of its common stock to cover employee related taxes withheld on vested restricted stock and performance stock unit awards. In the first three months of fiscal 2018, the Company repurchased approximately 1.2 million shares of its common stock for a total cost of approximately $22.1 million, bringing the aggregate total of common stock repurchased to approximately 202.5 million shares for a total cost of approximately $10.5 billion since the initial authorization in December 2004. The Company has approximately $1.5 billion remaining of authorized share repurchases as of June 2, 2018.

During fiscal 2016, the Company's Board of Directors authorized a quarterly dividend program. During the three months ended June 2, 2018 and May 27, 2017, total cash dividends of $21.4 million and $18.2 million were paid, respectively. Subsequent to the end of the first quarter of fiscal 2018, on June 27, 2018, the Company's Board of Directors 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 Company expects to pay quarterly cash dividends on its common stock in the future, subject to the determination by the Board of Directors, based on an evaluation of the Company's earnings, financial condition and requirements, business conditions and other factors.

Cash dividends, if any, are accrued as a liability on the Company's consolidated balance sheets and recorded as a decrease to additional paid-in capital when declared.

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Stock-based Compensation

3 Months Ended

Jun. 02, 2018

Share-based Compensation [Abstract]

Stock-Based Compensation

Stock-Based Compensation

The Company measures all employee stock-based compensation awards using a fair value method and records such expense, net of estimated forfeitures, in its consolidated financial statements. Currently, the Company's stock-based compensation relates to restricted stock awards, stock options and performance stock units. The Company's restricted stock awards are considered nonvested share awards.

Stock-based compensation expense for the three months ended June 2, 2018 was approximately $23.6 million ($15.9 million after tax or $0.12 per diluted share). Stock-based compensation expense for the three months ended May 27, 2017 was approximately $21.5 million ($12.4 million after tax or $0.09 per diluted share). In addition, the amount of stock-based compensation cost capitalized for the three months ended June 2, 2018 and May 27, 2017 was approximately $0.7 million and $0.5 million, respectively.

Incentive Compensation Plans

The Company grants awards under the Bed Bath & Beyond 2012 Incentive Compensation Plan (the "2012 Plan"), which amended and restated the Bed Bath & Beyond 2004 Incentive Compensation Plan (the "2004 Plan"). The 2012 Plan includes an aggregate of 43.2 million common shares authorized for issuance and the ability to grant incentive stock options. Outstanding awards that were covered by the 2004 Plan continue to be in effect under the 2012 Plan.

The 2012 Plan is a flexible compensation plan that enables the Company to offer incentive compensation through stock options (whether nonqualified stock options or incentive stock options), restricted stock awards, stock appreciation rights, performance awards and other stock based awards, including cash awards. Under the 2012 Plan, grants are determined by the Compensation Committee for those awards granted to executive officers and by an appropriate committee for all other awards granted. Awards of stock options and restricted stock generally vest in five equal annual installments beginning one to three years from the date of grant. Awards of performance stock units generally vest over a period of four years from the date of grant dependent on the Company's achievement of performance-based tests and subject, in general, to the executive remaining in the Company's service on specified vesting dates.

The Company generally issues new shares for stock option exercises, restricted stock awards and vesting of performance stock units.

On May 22, 2018, the Company adopted the Bed Bath & Beyond 2018 Incentive Compensation Plan (the “2018 Plan”), subject to and effective upon shareholder approval, which was obtained on June 29, 2018, subsequent to the end of the first quarter of fiscal 2018. The 2018 Plan is generally based on the provisions of the 2012 Plan as currently in effect and also includes an aggregate share reserve of 4.6 million shares of common stock. The 2012 Plan will continue in effect without modification in accordance with its existing terms. The 2012 Plan and the 2018 Plan have a total of 47.8 million shares authorized for issuance.

Stock Options

Stock option grants are issued at fair market value on the date of grant and generally become exercisable in either three or five equal annual installments beginning one year from the date of grant, subject, in general, to the recipient remaining in the Company's service on specified vesting dates. Option grants expire eight years after the date of grant. All option grants are nonqualified. As of June 2, 2018, unrecognized compensation expense related to the unvested portion of the Company's stock options was $18.8 million, which is expected to be recognized over a weighted average period of 3.3 years.

The fair value of the stock options granted was estimated on the date of the grant using a Black-Scholes option-pricing model that uses the assumptions noted in the following table.

	Three Months Ended
Black-Scholes Valuation Assumptions (1)	June 2, 2018		May 27, 2017
Weighted Average Expected Life (in years) (2)	6.7		6.7
Weighted Average Expected Volatility (3)	34.96	%	26.49	%
Weighted Average Risk Free Interest Rates (4)	2.92	%	2.17	%
Expected Dividend Yield (5)	3.80	%	1.60	%

(1) Forfeitures are estimated based on historical experience.

(2) The expected life of stock options is estimated based on historical experience.

(3) Expected volatility is based on the average of historical and implied volatility. The historical volatility is determined by observing actual prices of the Company's stock over a period commensurate with the expected life of the awards. The implied volatility represents the implied volatility of the Company's call options, which are actively traded on multiple exchanges, had remaining maturities in excess of twelve months, had market prices close to the exercise prices of the employee stock options and were measured on the stock option grant date.

(4) Based on the U.S. Treasury constant maturity interest rate whose term is consistent with the expected life of the stock options.

(5) Expected dividend yield is estimated based on anticipated dividend payouts.

Changes in the Company's stock options for the three months ended June 2, 2018 were as follows:

(Shares in thousands)	Number of Stock Options		Weighted Average Exercise Price
Options outstanding, beginning of period	4,241		$	55.76
Granted	1,065		16.85
Exercised	—		—
Forfeited or expired	(432	)	45.20
Options outstanding, end of period	4,874		$	48.19
Options exercisable, end of period	2,691		$	61.05

The weighted average fair value for the stock options granted during the first three months of fiscal 2018 and 2017 was $4.31 and $9.50, respectively. The weighted average remaining contractual term and the aggregate intrinsic value for options outstanding as of June 2, 2018 was 4.8 years and $1.0 million, respectively. The weighted average remaining contractual term for options exercisable as of June 2, 2018 was 3.1 years and the aggregate intrinsic value was $0. There were no stock options exercised during the first three months of fiscal 2018. The total intrinsic value for stock options exercised during the first three months of fiscal 2017 was $3.9 million.

Restricted Stock

Restricted stock awards are issued and measured at fair market value on the date of grant and generally become vested in five to seven equal annual installments beginning one to three years from the date of grant, subject, in general, to the recipient remaining in the Company's service on specified vesting dates. Vesting of restricted stock is based solely on time vesting. As of June 2, 2018, unrecognized compensation expense related to the unvested portion of the Company's restricted stock awards was $134.6 million, which is expected to be recognized over a weighted average period of 4.5 years.

Changes in the Company's restricted stock for the three months ended June 2, 2018 were as follows:

(Shares in thousands)	Number of Restricted Shares		Weighted Average Grant-Date Fair Value
Unvested restricted stock, beginning of period	4,311		$	48.07
Granted	476		17.64
Vested	(518	)	61.39
Forfeited	(93	)	44.76
Unvested restricted stock, end of period	4,176		$	43.02

Performance Stock Units

Performance stock units ("PSUs") are issued and measured at fair market value on the date of grant. Vesting of PSUs awarded to certain of the Company's executives is dependent on the Company's achievement of a performance-based test during a one-year period from the date of grant and during a three-year period from the date of grant and, assuming achievement of the performance-based test, time vesting over periods of up to four years, subject, in general, to the executive remaining in the Company's service on specified vesting dates. Performance during the one-year period will be based on Earnings Before Interest and Taxes ("EBIT") margin relative to a peer group of the Company and performance during the three-year period will be based on Return on Invested Capital ("ROIC") or a combination of EBIT margin and ROIC relative to such peer group. The awards based on EBIT margin and ROIC range from a floor of zero to a cap of 150% of target achievement. PSUs are converted into shares of common stock upon payment following vesting. Upon grant of the PSUs, the Company recognizes compensation expense related to these awards based on the assumption that 100% of the target award will be achieved. The Company evaluates the target assumption on a quarterly basis and adjusts compensation expense related to these awards, as appropriate. As of June 2, 2018, unrecognized compensation expense related to the unvested portion of the Company's performance stock units was $34.9 million, which is expected to be recognized over a weighted average period of 2.1 years.

Changes in the Company's PSUs for the three months ended June 2, 2018 were as follows:

(Shares in thousands)	Number of Performance Stock Units		Weighted Average Grant-Date Fair Value
Unvested performance stock units, beginning of period	1,352		$	46.06
Granted	1,253		16.85
Vested	(492	)	50.82
Forfeited	—		—
Unvested performance stock units, end of period	2,113		$	27.63

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Earnings per Share

3 Months Ended

Jun. 02, 2018

Earnings Per Share [Abstract]

Earnings per Share

Earnings per Share

The Company presents earnings per share on a basic and diluted basis. Basic earnings per share has been computed by dividing net earnings by the weighted average number of shares outstanding. Diluted earnings per share has been computed by dividing net earnings by the weighted average number of shares outstanding, including the dilutive effect of stock-based awards as calculated under the treasury stock method.

Stock-based awards of approximately 8.5 million and 7.2 million shares were excluded from the computation of diluted earnings per share as the effect would be anti-dilutive for the three months ended June 2, 2018 and May 27, 2017, respectively.

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Supplemental Cash Flow Information

3 Months Ended

Jun. 02, 2018

Supplemental Cash Flow Information [Abstract]

Supplemental Cash Flow Information

Supplemental Cash Flow Information

The Company paid income taxes of $3.2 million and $8.7 million in the first three months of fiscal 2018 and 2017, respectively. In addition, the Company had interest payments of approximately $2.2 million in both the first three months of fiscal 2018 and 2017.

The Company recorded an accrual for capital expenditures of $28.0 million and $34.1 million as of June 2, 2018 and May 27, 2017, respectively. In addition, the Company recorded an accrual for dividends payable of $26.3 million and $23.6 million as of June 2, 2018 and May 27, 2017, respectively.

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Acquisition

3 Months Ended

Jun. 02, 2018

Business Combinations [Abstract]

Acquisition

Acquisition

On March 6, 2017, the Company acquired Decorist, Inc., an online interior design platform that provides personalized home design services. Since the date of acquisition, the results of Decorist's operations, which were not material, have been included in the Company's results of operations and no proforma disclosure of financial information has been presented. Decorist is included in the North American Retail operating segment.

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Recent Accounting Pronouncements (Policies)

3 Months Ended

May 27, 2017

Accounting Policies [Abstract]

New Accounting Pronouncements, Policy

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606). This guidance requires an entity to recognize revenue in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard also will result in enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In July 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. This guidance deferred the effective date of ASU 2014-09 for one year from the original effective date. In accordance with the deferral, ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. In 2016, the FASB issued several amendments to clarify various aspects of the implementation guidance. ASU 2014-09 can be adopted either retrospectively to each prior reporting period presented or as a cumulative-effect adjustment as of the date of adoption.  At the beginning of the first quarter of fiscal 2018, the Company adopted ASU 2014-09 using the modified retrospective transition method and recognized the cumulative effect of applying this standard to opening retained earnings. The Company recorded a net after-tax reduction to opening retained earnings of approximately $4.2 million as of March 4, 2018. The comparative financial information has not been adjusted and continues to be reported under ASC Topic 605, Revenue Recognition (Topic 605).

The majority of the Company’s revenue is generated from the sale of product in its retail stores, which will continue to be recognized when control of the product is transferred to the customer. The adoption of ASU 2014-09 resulted in the following changes:

• A change in the timing of recognizing advertising expense related to direct response advertising. These costs that were previously expensed over the period during which the sales were expected to occur will now be expensed on the first day of the direct response advertising event.

• A change in the presentation of the sales return reserve on the consolidated balance sheet, as estimated costs of returns will be recorded as a current asset rather than netted with the sales return reserve.

• Changes in the presentation of certain other revenue streams on the consolidated statement of earnings between net sales, cost of sales, and selling, general and administrative expenses.

The below tables set forth the adjustments to the Company’s consolidated statement of earnings and consolidated balance sheet as a result of the newly adopted revenue recognition standard.

	Three months ended June 2, 2018
(In thousands)	As Reported		Balances Without Adoption of ASU 2014-09		Impact of Adoption Increase/(Decrease)
Net sales	$	2,753,667	$	2,755,312	$	(1,645	)
Cost of sales	1,788,819		1,795,164		(6,345		)
Gross profit	964,848		960,148		4,700
Selling, general and administrative expenses	883,619		888,154		(4,535		)
Operating profit	81,229		71,994		9,235
Interest expense, net	16,732		16,732		—
Earnings before provision for income taxes	64,497		55,262		9,235
Provision for income taxes	20,921		18,590		2,331
Net earnings	$	43,576	$	36,672	$	6,904
Net earnings per share - Diluted	$	0.32	$	0.27	$	0.05

	June 2, 2018
(In thousands)	As Reported		Balances Without Adoption of ASU 2014-09		Impact of Adoption Increase/(Decrease)
Assets
Merchandise inventories	$	2,646,263	$	2,648,181	$	(1,918	)
Prepaid expenses and other current assets	483,159		378,516		104,643
Liabilities and Shareholders' Equity
Accrued expenses and other current liabilities	716,069		605,137		110,932
Merchandise credit and gift card liabilities	329,055		339,945		(10,890		)
Retained earnings	11,360,572		11,357,889		2,683

The Company expects the impact of the adoption of the new standard to be immaterial to the Company's full year fiscal 2018 consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. ASU 2017-01 requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of identifiable assets, the set of assets would not represent a business. Also, in order to be considered a business, an acquisition would have to include an input and a substantive process that together significantly contribute to the ability to produce outputs. Under the update, fewer sets of assets are expected to be considered businesses. ASU 2017-01 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The Company adopted this guidance at the beginning of the first quarter of fiscal 2018 and it did not have a material effect on the Company's consolidated financial position, results of operations, or cash flows.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This guidance requires an entity to recognize lease liabilities and a right-of-use asset for all leases on the balance sheet and to disclose key information about the entity's leasing arrangements. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, with earlier adoption permitted. ASU 2016-02 must be adopted using a modified retrospective approach for all leases existing at, or entered into after the date of initial adoption, with an option to elect to use certain transition relief. The Company is currently evaluating the impact of this new standard on its consolidated financial statements and related disclosures, but expects that it will result in a significant increase in the assets and liabilities recorded on the consolidated balance sheet.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 eliminates the requirement to calculate the implied fair value of goodwill to measure the amount of impairment loss, if any, under the second step of the current goodwill impairment test. Under the update, the goodwill impairment loss would be measured as the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 is effective for annual reporting periods beginning after December 15, 2019, with early adoption permitted. The adoption of this guidance is not expected to have a significant effect on the Company's consolidated financial position, results of operations, or cash flows.

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Recent Accounting Pronouncements (Tables)

3 Months Ended

Jun. 02, 2018

Accounting Policies [Abstract]

Schedule of New Accounting Pronouncements and Changes in Accounting Principles

The below tables set forth the adjustments to the Company’s consolidated statement of earnings and consolidated balance sheet as a result of the newly adopted revenue recognition standard.

	Three months ended June 2, 2018
(In thousands)	As Reported		Balances Without Adoption of ASU 2014-09		Impact of Adoption Increase/(Decrease)
Net sales	$	2,753,667	$	2,755,312	$	(1,645	)
Cost of sales	1,788,819		1,795,164		(6,345		)
Gross profit	964,848		960,148		4,700
Selling, general and administrative expenses	883,619		888,154		(4,535		)
Operating profit	81,229		71,994		9,235
Interest expense, net	16,732		16,732		—
Earnings before provision for income taxes	64,497		55,262		9,235
Provision for income taxes	20,921		18,590		2,331
Net earnings	$	43,576	$	36,672	$	6,904
Net earnings per share - Diluted	$	0.32	$	0.27	$	0.05

	June 2, 2018
(In thousands)	As Reported		Balances Without Adoption of ASU 2014-09		Impact of Adoption Increase/(Decrease)
Assets
Merchandise inventories	$	2,646,263	$	2,648,181	$	(1,918	)
Prepaid expenses and other current assets	483,159		378,516		104,643
Liabilities and Shareholders' Equity
Accrued expenses and other current liabilities	716,069		605,137		110,932
Merchandise credit and gift card liabilities	329,055		339,945		(10,890		)
Retained earnings	11,360,572		11,357,889		2,683

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Investment Securities (Tables)

3 Months Ended

Jun. 02, 2018

Investments, Debt and Equity Securities [Abstract]

Investment Securities

The Company's investment securities as of June 2, 2018 and March 3, 2018 are as follows:

(in millions)	June 2, 2018		March 3, 2018
Available-for-sale securities:
Long term	$	19.9	$	19.4
Trading securities:
Short term	88.4		86.3
Held-to-maturity securities:
Short term	59.9		291.7
Total investment securities	168.2		397.4

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Stock-based Compensation (Tables)

3 Months Ended

Jun. 02, 2018

Share-based Compensation [Abstract]

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

The fair value of the stock options granted was estimated on the date of the grant using a Black-Scholes option-pricing model that uses the assumptions noted in the following table.

	Three Months Ended
Black-Scholes Valuation Assumptions (1)	June 2, 2018		May 27, 2017
Weighted Average Expected Life (in years) (2)	6.7		6.7
Weighted Average Expected Volatility (3)	34.96	%	26.49	%
Weighted Average Risk Free Interest Rates (4)	2.92	%	2.17	%
Expected Dividend Yield (5)	3.80	%	1.60	%

(1) Forfeitures are estimated based on historical experience.

(2) The expected life of stock options is estimated based on historical experience.

(3) Expected volatility is based on the average of historical and implied volatility. The historical volatility is determined by observing actual prices of the Company's stock over a period commensurate with the expected life of the awards. The implied volatility represents the implied volatility of the Company's call options, which are actively traded on multiple exchanges, had remaining maturities in excess of twelve months, had market prices close to the exercise prices of the employee stock options and were measured on the stock option grant date.

(4) Based on the U.S. Treasury constant maturity interest rate whose term is consistent with the expected life of the stock options.

(5) Expected dividend yield is estimated based on anticipated dividend payouts.

Share-based Compensation, Stock Options, Activity

Changes in the Company's stock options for the three months ended June 2, 2018 were as follows:

(Shares in thousands)	Number of Stock Options		Weighted Average Exercise Price
Options outstanding, beginning of period	4,241		$	55.76
Granted	1,065		16.85
Exercised	—		—
Forfeited or expired	(432	)	45.20
Options outstanding, end of period	4,874		$	48.19
Options exercisable, end of period	2,691		$	61.05

Schedule of Share-based Compensation, Restricted Stock Units Award Activity

Changes in the Company's restricted stock for the three months ended June 2, 2018 were as follows:

(Shares in thousands)	Number of Restricted Shares		Weighted Average Grant-Date Fair Value
Unvested restricted stock, beginning of period	4,311		$	48.07
Granted	476		17.64
Vested	(518	)	61.39
Forfeited	(93	)	44.76
Unvested restricted stock, end of period	4,176		$	43.02

Share-based Compensation, Performance Shares Award Nonvested Activity

Changes in the Company's PSUs for the three months ended June 2, 2018 were as follows:

(Shares in thousands)	Number of Performance Stock Units		Weighted Average Grant-Date Fair Value
Unvested performance stock units, beginning of period	1,352		$	46.06
Granted	1,253		16.85
Vested	(492	)	50.82
Forfeited	—		—
Unvested performance stock units, end of period	2,113		$	27.63

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Basis of Presentation (Details Textual)	3 Months Ended
	Jun. 02, 2018 segment
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of operating segments	2

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Recent Accounting Pronouncements (Details Textual) - USD ($) $ in Thousands	Jun. 02, 2018	Mar. 04, 2018	Mar. 03, 2018
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Retained earnings	$ 11,360,572		$ 11,343,503
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Accounting Standards Update 2014-09 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Retained earnings	$ 2,683	$ (4,200)

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Recent Accounting Pronouncements - Schedule of Impact on Earnings (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Jun. 02, 2018	May 27, 2017
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
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 - Diluted	$ 0.32	$ 0.53
Calculated under Revenue Guidance in Effect before Topic 606 [Member]
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Net sales	$ 2,755,312
Cost of sales	1,795,164
Gross profit	960,148
Selling, general and administrative expenses	888,154
Operating profit	71,994
Interest expense, net	16,732
Earnings before provision for income taxes	55,262
Provision for income taxes	18,590
Net earnings	$ 36,672
Net earnings per share - Diluted	$ 0.27
Accounting Standards Update 2014-09 [Member] | Difference between Revenue Guidance in Effect before and after Topic 606 [Member]
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Net sales	$ (1,645)
Cost of sales	(6,345)
Gross profit	4,700
Selling, general and administrative expenses	(4,535)
Operating profit	9,235
Interest expense, net	0
Earnings before provision for income taxes	9,235
Provision for income taxes	2,331
Net earnings	$ 6,904
Net earnings per share - Diluted	$ 0.05

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Recent Accounting Pronouncements - Schedule of Impact on Balance Sheet (Details) - USD ($) $ in Thousands	Jun. 02, 2018	Mar. 04, 2018	Mar. 03, 2018
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Merchandise inventories	$ 2,646,263		$ 2,730,874
Prepaid expenses and other current assets	483,159		516,025
Accrued expenses and other current liabilities	716,069		633,100
Merchandise credit and gift card liabilities	329,055		335,081
Retained earnings	11,360,572		$ 11,343,503
Calculated under Revenue Guidance in Effect before Topic 606 [Member]
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Merchandise inventories	2,648,181
Prepaid expenses and other current assets	378,516
Accrued expenses and other current liabilities	605,137
Merchandise credit and gift card liabilities	339,945
Retained earnings	11,357,889
Accounting Standards Update 2014-09 [Member] | Difference between Revenue Guidance in Effect before and after Topic 606 [Member]
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Merchandise inventories	(1,918)
Prepaid expenses and other current assets	104,643
Accrued expenses and other current liabilities	110,932
Merchandise credit and gift card liabilities	(10,890)
Retained earnings	$ 2,683	$ (4,200)

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Revenue Recognition (Details) - USD ($) $ in Millions	3 Months Ended
	Jun. 02, 2018	May 27, 2017	Mar. 03, 2018
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Net sales for gift card and merchandise credit redemptions			$ 54.0
Liability for estimated returns	$ 150.6
Right of return asset for merchandise	$ 108.8
Sales Revenue, Net [Member] | Domestic Merchandise [Member] | Product Concentration Risk [Member]
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Percentage of net sales	36.00%	36.20%
Sales Revenue, Net [Member] | Home Furnishings [Member] | Product Concentration Risk [Member]
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Percentage of net sales	64.00%	63.80%

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Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 03, 2018	Jun. 02, 2018
Income Tax Disclosure [Abstract]
Net unfavorable tax impact	$ 10.5
Provisional tax impact due to tax act	$ 26.8	$ 0.0

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Fair Value Measurements (Details Textual) $ in Millions	Jun. 02, 2018 USD ($)
Fair Value Disclosures [Abstract]
Long-term debt, fair value	$ 1,192
Long-term debt	$ 1,500

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Cash and Cash Equivalents (Details Textual) - USD ($) $ in Millions	Jun. 02, 2018	Mar. 03, 2018
Cash and Cash Equivalents [Abstract]
Credit and debit card receivables from banks	$ 95.5	$ 95.6

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Investment Securities - Summary of Investment Securities (Details) - USD ($) $ in Millions	Jun. 02, 2018	Mar. 03, 2018
Available-for-sale securities:
Long term	$ 19.9	$ 19.4
Trading securities:
Short term	88.4	86.3
Held-to-maturity securities:
Short term	59.9	291.7
Total investment securities	$ 168.2	$ 397.4

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Investment Securities (Details Textual) - USD ($) $ in Millions	Jun. 02, 2018	Mar. 03, 2018
Schedule of Available-for-sale Securities [Line Items]
Short term held-to-maturity securities	$ 59.9	$ 291.7
Auction Rate Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Long term available-for-sale investment securities	20.3	20.3
Valuation adjustments	0.4	0.9
Other Trading Investment Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Trading investment securities	$ 88.4	$ 86.3

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Property and Equipment (Details Textual) - USD ($) $ in Billions	Jun. 02, 2018	Mar. 03, 2018
Property, Plant and Equipment [Abstract]
Accumulated depreciation	$ 3.2	$ 3.1

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Long Term Debt (Details Textual) $ in Thousands			3 Months Ended
	Nov. 14, 2017 USD ($)	Aug. 06, 2014 USD ($)	Jun. 02, 2018 USD ($) line_of_credit	May 27, 2017 USD ($)	Jul. 17, 2014 USD ($)
Debt Instrument [Line Items]
Number of uncommitted lines of credit | line_of_credit			2
Senior Unsecured Notes and Revolver [Member]
Debt Instrument [Line Items]
Interest expense			$ 18,200	$ 18,200
Other Assets [Member] | Senior Unsecured Notes and Revolver [Member]
Debt Instrument [Line Items]
Deferred financing costs		$ 10,500
Revolving Credit Facility [Member] | Revolver [Member]
Debt Instrument [Line Items]
Senior unsecured revolving credit facility	$ 250,000
Debt instrument term (in years)	5 years	5 years
Revolving Credit Facility [Member] | New Revolver [Member]
Debt Instrument [Line Items]
Senior unsecured revolving credit facility	$ 250,000
Uncommitted Line of Credit Expiring February 25, 2018 [Member]
Debt Instrument [Line Items]
Senior unsecured revolving credit facility			$ 100,000
Senior Unsecured Notes [Member] | The 2034 Notes [Member]
Debt Instrument [Line Items]
Aggregate principal amount					$ 300,000
Debt instrument, interest rate, stated percentage					4.915%
Senior Unsecured Notes [Member] | The 2024 Notes [Member]
Debt Instrument [Line Items]
Aggregate principal amount					$ 300,000
Debt instrument, interest rate, stated percentage					3.749%
Senior Unsecured Notes [Member] | The 2044 Notes [Member]
Debt Instrument [Line Items]
Aggregate principal amount					$ 900,000
Debt instrument, interest rate, stated percentage					5.165%

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Shareholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions	3 Months Ended		161 Months Ended
	Jun. 02, 2018	May 27, 2017	Jun. 02, 2018	Sep. 30, 2015
Stockholders' Equity Note [Abstract]
Share repurchase program authorized amount				$ 11,950,000
Shares repurchased	1.2		202.5
Repurchase of common stock, including fees	$ 22,110	$ 127,324	$ 10,500,000
Remaining authorized share repurchase amount under program	1,500,000		$ 1,500,000
Total cash dividends paid	$ 21,414	$ 18,161
Dividends declared per share	$ 0.16	$ 0.150

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Stock-based Compensation (Details Textual) - USD ($) $ / shares in Units, shares in Millions	3 Months Ended
	Jun. 02, 2018	May 27, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 23,600,000	$ 21,500,000
Stock-based compensation expense, after tax	$ 15,900,000	$ 12,400,000
Stock-based compensation expense, after tax, per diluted share	$ 0.12	$ 0.09
Stock-based compensation cost capitalized	$ 700,000	$ 500,000
Unrecognized compensation expense related to unvested stock options	$ 18,800,000
Weighted average remaining contractual term (in years)	4 years 300 days
Aggregate intrinsic value for options outstanding	$ 1,000,000.0
Weighted average remaining contractual term for options exercisable (in years)	3 years 20 days
Aggregate intrinsic value of options exercisable	$ 0
Total intrinsic value for stock options exercised		$ 3,900,000
Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Period for recognition, weighted average period (in years)	2 years 20 days
Unrecognized compensation expense related to unvested performance stock units	$ 34,900,000
Performance Shares [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Target award percentage	150.00%
Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Period for recognition, weighted average period (in years)	3 years 3 months
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Period for recognition, weighted average period (in years)	4 years 200 days
Unrecognized compensation expense related to unvested performance stock units	$ 134,600,000
2012 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common shares authorized for issuance	43.2
Weighted average fair value for stock options granted (in dollars per share)	$ 4.31	$ 9.50
2012 Plan [Member] | Employee Stock Options and Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period maximum	3 years
2012 Plan [Member] | Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period (in years)	4 years
2012 Plan [Member] | Performance Shares [Member] | Scenario Assumption [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Target award percentage	100.00%
2012 Plan [Member] | Performance Shares [Member] | One-year Performance Period Awards [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period minimum	1 year
Vesting period maximum	3 years
Vesting period (in years)	4 years
2012 Plan [Member] | Performance Shares [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Target award percentage	0.00%
2012 Plan [Member] | Employee Stock Option Issued Since May 10, 2010 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award requisite service period (in years)	1 year
Share-based compensation arrangement by share-based payment award, expiration period (in years)	8 years
2012 Plan [Member] | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period minimum	1 year
Vesting period maximum	3 years
2018 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate share reserve (in shares)	4.6
The 2012 and 2018 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common shares authorized for issuance	47.8

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Stock-based Compensation - Assumptions Used to Estimate the Black-scholes Fair Value of Stock Options Granted (Details) - Employee Stock Option [Member]	3 Months Ended
	Jun. 02, 2018	May 27, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted Average Expected Life (in years)	6 years 255 days	6 years 255 days
Weighted Average Expected Volatility	34.96%	26.49%
Weighted Average Risk Free Interest Rates	2.92%	2.17%
Expected Dividend Yield	3.80%	1.60%

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Stock-based Compensation - Changes in the Company's Stock Options (Details) shares in Thousands	3 Months Ended
	Jun. 02, 2018 $ / shares shares
Number of Stock Options
Options outstanding, beginning of period, Number of Stock Options (in shares) | shares	4,241
Granted, Number of Stock Options (in shares) | shares	1,065
Exercised, Number of Stock Options (in shares) | shares	0
Forfeited or expired, Number of Stock Options (in shares) | shares	(432)
Options outstanding, end of period, Number of Stock Options (in shares) | shares	4,874
Options exercisable, end of period, Number of Stock Options (in shares) | shares	2,691
Weighted Average Exercise Price
Options outstanding, beginning of period, Weighted Average Exercise Price (in dollars per share) | $ / shares	$ 55.76
Granted, Weighted Average Exercise Price (in dollars per share) | $ / shares	16.85
Exercised, Weighted Average Exercise Price (in dollars per share) | $ / shares	0.00
Forfeited or expired, Weighted Average Exercise Price (in dollars per share) | $ / shares	45.20
Options outstanding, end of period, Weighted Average Exercise Price (in dollars per share) | $ / shares	48.19
Options exercisable, end of period, Weighted Average Exercise Price (in dollars per share) | $ / shares	$ 61.05

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Stock-based Compensation - Changes in the Company's Restricted Stock (Details) - Restricted Stock [Member] shares in Thousands	3 Months Ended
	Jun. 02, 2018 $ / shares shares
Number of Restricted Shares
Unvested shares, beginning of period (in shares) | shares	4,311
Granted (in shares) | shares	476
Vested (in shares) | shares	(518)
Forfeited, (in shares) | shares	(93)
Unvested shares, end of period (in shares) | shares	4,176
Weighted Average Grant-Date Fair Value
Unvested shares, Weighted Average Grant Date Fair Value, beginning of period (in dollars per share) | $ / shares	$ 48.07
Granted, Weighted Average Grant Date Fair Value (in dollars per share) | $ / shares	17.64
Vested, Weighted Average Grant Date Fair Value ( in dollars per share) | $ / shares	61.39
Forfeited, Weighted Average Grant-Date Fair Value (in dollars per share) | $ / shares	44.76
Unvested shares, Weighted Average Grant Date Fair Value, end of period (in dollars per share) | $ / shares	$ 43.02

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Stock-based Compensation - Changes in the Company's Performance Stock Units (Details) - Performance Shares [Member] shares in Thousands	3 Months Ended
	Jun. 02, 2018 $ / shares shares
Number of Restricted Shares
Unvested shares, beginning of period (in shares) | shares	1,352
Granted (in shares) | shares	1,253
Vested (in shares) | shares	(492)
Forfeited, (in shares) | shares	0
Unvested shares, end of period (in shares) | shares	2,113
Weighted Average Grant-Date Fair Value
Unvested shares, Weighted Average Grant Date Fair Value, beginning of period (in dollars per share) | $ / shares	$ 46.06
Granted, Weighted Average Grant Date Fair Value (in dollars per share) | $ / shares	16.85
Vested, Weighted Average Grant Date Fair Value ( in dollars per share) | $ / shares	50.82
Forfeited, Weighted Average Grant-Date Fair Value (in dollars per share) | $ / shares	0.00
Unvested shares, Weighted Average Grant Date Fair Value, end of period (in dollars per share) | $ / shares	$ 27.63

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Earnings per Share (Details Textual) - shares shares in Millions	3 Months Ended
	Jun. 02, 2018	May 27, 2017
Earnings Per Share [Abstract]
Stock-based awards excluded from computation of diluted earnings per share	8.5	7.2

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Supplemental Cash Flow Information (Details Textual) - USD ($) $ in Millions	3 Months Ended
	Jun. 02, 2018	May 27, 2017
Supplemental Cash Flow Information [Abstract]
Income taxes paid	$ 3.2	$ 8.7
Interest payments	2.2	2.2
Accrual for capital expenditures	28.0	34.1
Accrual for dividends payable	$ 26.3	$ 23.6