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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended February 27, 2021
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________

Commission File Number 0-20214
BED BATH & BEYOND INC.
(Exact name of registrant as specified in its charter)
New York11-2250488
(State or other jurisdiction of(IRS Employer
incorporation or organization)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
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol (s)Name of each exchange on which registered
Common stock, $.01 par valueBBBYThe Nasdaq Stock Market LLC
(Nasdaq Global Select Market)
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes X No __
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes __ No X
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 X No __
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes X 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.


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Large accelerated filer Accelerated filer
Non-accelerated filer 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 13(a) of the Exchange Act. ___
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No X
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. X
As of August 29, 2020, the aggregate market value of the common stock held by non-affiliates (which was computed by reference to the closing price on such date of such stock on the Nasdaq Global Select Market) was $1,486,168,316.*
The number of shares outstanding of the registrant’s common stock (par value $0.01 per share) at March 27, 2021: 109,122,398.
Documents Incorporated by Reference
Portions of the Registrant’s definitive proxy statement for the 2021 Annual Meeting of Shareholders to be filed pursuant to Regulation 14A are incorporated by reference in Part III hereof.
*    For purposes of this calculation, all outstanding shares of common stock have been considered held by non-affiliates other than the 3,082,800 shares beneficially owned by directors and executive officers. In making such calculation, the Registrant does not determine the affiliate or non-affiliate status of any shares for any other purpose.
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Item No.Name of ItemPage
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PART I

Unless otherwise indicated, references to "we," "our," "us," "ourselves" and the "Company" refer collectively to Bed Bath & Beyond Inc. and its subsidiaries as of February 27, 2021. Our fiscal year is comprised of the 52 or 53 week period ending on the Saturday nearest February 28. Accordingly, throughout this Annual Report on Form 10-K: (i) the term "fiscal 2020" means our fiscal year beginning on March 1, 2020 and ending February 27, 2021, (ii) the term "fiscal 2019" means our fiscal year beginning March 3, 2019 and ending February 29, 2020 and (iii) the term "fiscal 2018" means our fiscal year beginning March 4, 2018 and ending March 2, 2019. Unless otherwise indicated, all references herein to periods of time (e.g., quarters) are in relation to the fiscal years defined above.

ITEM 1 – BUSINESS
Overview

We are an omnichannel retailer that makes it easy for our customers to feel at home. We sell a wide assortment of merchandise in the Home, Baby, Beauty & Wellness markets and operate under the names Bed Bath & Beyond ("BBB"), buybuy BABY ("BABY"), and Harmon, Harmon Face Values, or Face Values (collectively, "Harmon"). We also operate Decorist ("Decorist"), an online interior design platform that provides personalized home design services.

We offer a broad assortment of national brands and a growing line of proprietary owned brand merchandise in key destination categories including bedding, bath, kitchen food prep, home organization, indoor décor, baby and personal care.

We operate a robust omnichannel platform consisting of various websites and applications and physical retail stores. Our e-commerce platforms include bedbathandbeyond.com, bedbathandbeyond.ca, harmondiscount.com, facevalues.com, buybuybaby.com, buybuybaby.ca and decorist.com. We also operate 1,020 retail stores, as of February 27, 2021, consisting of 834 BBB stores in all 50 states, the District of Columbia, Puerto Rico and Canada, 132 BABY stores in 37 states and Canada and 54 Harmon stores in five states. During fiscal 2020, we opened nine new stores and closed 144 stores. As of February 27, 2021, our total store square footage, net of openings and closings, was approximately 29.9 million square feet. In addition to our U.S. and Canadian operations, we are a partner in a joint venture that operates ten stores in Mexico under the name Bed Bath & Beyond.

Starting in late 2019, we have created a more focused portfolio through the divestiture of non-core assets, including businesses and real estate, as part of the ongoing business transformation underway. See “Transformation,” “Strategy” and “Divestitures” below.

Our merchandise and services are offered to customers through an omnichannel platform across our portfolio of banners, which consist of:

Bed Bath & Beyond - a leading specialty home retailer in North America that sells a wide assortment of domestics merchandise and home furnishings. BBB is a preferred destination in the home space, particularly in key product categories including bedding, bath, kitchen food prep, home organization and indoor decor.

buybuy BABY - a leading specialty baby retailer in North America that sells a wide assortment of baby essentials and nursery furnishings. BABY strives to build trust with parents by supporting them with what they need so families can celebrate every milestone – big and small – together.

Harmon Health and Beauty - offers an expansive assortment of leading name brand and private label personal care and beauty brands at deep everyday value.

Decorist - an online interior design company that makes decorating a home easy and affordable. Executed entirely online, Decorist's roster of over 400 professional interior designers help beautifully design any room in the home, staying within a client's style and budget. For customers not ready to start a full design project, they can consult Decorist's Design Bar to have quick design questions answered by Decorist's team of interior designers, completely free of charge.

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We allow our customers to purchase products either in-store, online (through The Beyond Store, our proprietary, web-based platform), with a mobile device or through a customer contact center, and we offer customers the option to pick up in-store or curbside, or to have products shipped directly from our distribution facilities, stores or vendors. We believe this integration of physical store and digital channels allows us to provide our customers with a seamless omnichannel shopping experience. Store purchases are primarily fulfilled from that store’s inventory or may also be shipped to a customer from one of our distribution facilities, from a vendor or from another store. Other purchases, including web and mobile orders, can be shipped to a customer from our distribution facilities, directly from vendors or from a store. Customers can also choose to pick up orders using our newly introduced Buy Online Pick Up In Store ("BOPIS"), contactless Curbside Pickup and Same Day Delivery services, as well as return online purchases by mail or to a store. As of February 27, 2021, we had distribution facilities totaling approximately 3.4 million square feet. These capabilities allow us to better serve customers across our omnichannel network.

For fiscal 2020, 2019 and 2018, we accounted for our operations as two operating segments: North American Retail and Institutional Sales, the latter of which did not meet the quantitative thresholds under GAAP and, therefore, was not a reportable segment. The Institutional Sales operating segment, comprised of Linen Holdings, was divested in October 2020. We will continue to account for our operations as one North American Retail reporting segment going forward. Net sales outside of the U.S. were not material for fiscal 2020, 2019 and 2018.

Transformation

Starting in late 2019, we have undertaken significant changes to transform our business and adapt to the dynamic retail environment and the evolving needs of our customers in order to position ourselves for long-term success. As part of these changes, our new management team, led by President and Chief Executive Officer (CEO) Mark Tritton who was appointed in November 2019, has been focused on driving an omni-always, customer-inspired strategy to re-establish our authority in the Home, Baby, Beauty & Wellness markets. We have created a more focused portfolio through the divestiture of non-core assets and further strengthened our financial flexibility through key actions such as corporate restructurings and operating expense control to re-set our cost structure and support our ongoing business transformation.

We are implementing a compelling growth strategy that will harness the power of data and insights to engage customers across our four core banners (BBB, BABY, Harmon and Decorist) in an enterprise-wide plan to accelerate our omnichannel transformation. Our strategy is underpinned by five key pillars of strategic focus and investment including product, price, promise, place and people. Through this approach, we are becoming a digital-first, customer-focused omnichannel retailer with a more curated, inspirational and differentiated product collection across categories, and creating a more convenient and inspirational shopping experience.

During 2020, as the world responded to the unparalleled challenges of the COVID-19 pandemic, we took thoughtful steps to safeguard our people and communities while we continued to serve our customers and drive transformative change throughout the organization. Similar to many other businesses, COVID-19 served as a catalyst to accelerate the pace of change and innovation at our Company— to advance our ongoing efforts to reset our cost structure and build a modern, durable model for long-term profitable growth.

Highlights of our progress in fiscal 2020 include:
Appointing an entirely new executive leadership team, including CEO Mark Tritton in November 2019, charged with streamlining decision-making, further strengthening the organization with leadership and talent and accelerating the pace of transformation.
Establishing new services in our omni-always platform that make it easier and more convenient for customers to shop with us including BOPIS, contactless Curbside Pickup and Same Day Delivery.
Launching 100+ customer-inspired improvements to the Bed Bath & Beyond website to elevate the customer experience, create ease and convenience and convert and acquire new customers. These improvements include making the website faster and more compelling to shop, simplifying the search process and reducing the number of steps in the checkout process.
Strengthening our inventory management capabilities and moving to a centralized ordering and replenishment system to improve in-stock levels, create greater operational efficiencies and support higher sales.
Realigning the organizational structure, including optimization of corporate overhead expense and reductions in other discretionary expense, to further re-set our cost base and simplify our operations to support investment in our strategic growth plans and provide additional financial flexibility.
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Optimizing our store network through the closure of approximately 200 mostly Bed Bath & Beyond stores over the next two years, 144 of which were closed as of February 27, 2021. We plan to continue to actively manage our real estate portfolio to permit store sizes, layouts, locations and offerings to evolve over time to optimize market profitability and to renovate or reposition stores within markets as appropriate. Over the past several years, the pace of our store openings has slowed, while the pace of store closings has increased. During fiscal 2019, we conducted a lease renegotiation project and started a store fleet optimization project for all BBB stores with the goal of creating a better balance between our physical and digital presence within the markets we serve. We continue to analyze our stores' performance, profitability, geographic location and customer demographics to understand how best to position our store locations in various markets across the U.S. and Canada.
Streamlining our portfolio with the divestiture of five non-core banners to create more focus on the remaining core businesses in Home, Baby, Beauty & Wellness. The non-core assets divested in 2020 include One Kings Lane, PersonalizationMall.com, Christmas Tree Shops, Cost Plus World Market and our institutional business comprised of Linen Holdings.

We will continue to build on this strong foundation as we execute our three-year growth strategy to further elevate the shopping experience, modernize our operations, and unlock strong and sustainable shareholder value.

Strategy

We have embraced a digital-first, omni-always growth strategy that supports our purpose to make it easy to feel at home and our mission to re-establish our authority and be the preferred omni-channel home destination driven by teams consistently delivering balanced durable growth. The framework of our strategy is based on the principles of being customer inspired, omni-always, people powered and performance driven. The business initiatives intended to drive our growth are rooted in the following five pillars:
1.Product: We are refining and amplifying an exciting omnichannel assortment that rebuilds authority and preference for Bed Bath & Beyond and creates energy through differentiation and curation.
2.Price: We are investing in and clarifying compelling value through more choice with opening price points, relevant owned brands and clear price communications in order to sharpen our value for quality proposition and to both acquire and win back customers.
3.Place: We are accelerating and optimizing connecting with, inspiring and energizing our customers by becoming a truly omni-always retailer to serve their preferred shopping needs.
4.Promise: We are clarifying and deepening our relationship with our customers by connecting, engaging and motivating them to strengthen loyalty and lifetime value.
5.People: We are creating and sustaining a talent engine and culture that attracts, retains and develops high-performing teams who consistently deliver operational excellence and business results.
With these five pillars as our guide, we are embracing a commitment to reconstruct and modernize our operating model to drive efficiency and effectiveness, charting a new course for our Company.
Product. We are pursuing three key initiatives across our product strategy: developing an inspirational and more productive assortment, working closing with suppliers to reduce product cost and improving inventory management. We are rebuilding our authority in destination categories such as bedding, bath, kitchen food prep and home organization, which will feature the launch of more than 10 new proprietary owned brands over the next few years that will address a wide variety of customer needs, including value, style and destination categories. At the same time, we will be elevating the customer experience both in-store and online to be more inspirational, focusing on destination rooms and making it easier to navigate and more convenient to shop. As we build out our new assortment, we expect to leverage our scale and volume to re-negotiate significantly lower sourcing costs from our suppliers. In addition, we are strengthening our inventory management capabilities by moving to a centralized ordering and replenishment system expected to optimize inventory by channel and store, improve markdown management and drive overall productivity.
Price. Our data-driven pricing strategy includes four key elements: ensuring our products are competitively priced, having a more value-driven assortment across a variety of price points, building more disciplined processes to drive effective and efficient promotions, and strengthening the way we communicate value to our customers. We regularly monitor price levels at our competitors in order to ensure that our prices are in accordance with our pricing philosophy. We will also continue to improve price competitiveness across key categories while also addressing assortment gaps in value tiers, to help us compete better with mass retailers and attract new customers to our business. We will use data-
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driven insights to build discipline into the use of promotions, to increase return on investment and reduce ineffective promotional activity.
Place. Our growth strategy leads with digital across channels and leverages our stores to our competitive advantage to drive a seamless customer experience. We are enhancing our digital experience through improved storytelling, making our websites and mobile site speeds faster, and making it easier for customers to find what they need and place an order more quickly. To create a more seamless experience across channels, we have also launched new omni-channel services such as BOPIS, contactless Curbside pickup and Same Day Delivery. We have expanded our ship from store capabilities, leveraging our national footprint and local market proximity to demand, and we are enhancing our store experience through data-driven store remodels and improving the productivity of our stores through a network optimization program.
Promise. With a large customer base of approximately 37 million, one in five homes in the U.S., is a Bed Bath & Beyond home. The addition of 11 million new digital customers during 2020 highlights our strong potential to attract, retain and drive spend within the Home, Baby, Beauty & Wellness markets. As part of our strategic growth plans, we are launching a new customer value proposition to deepen connections with five core customer segments. In addition, we are developing an enterprise-wide strategy to unlock value across our core brands, including plans for a reinvented loyalty program to deepen customer relationships and motivate increased shopping across categories, channels and banners.
People. Since the appointment of our President and CEO, Mark Tritton, we have recruited highly energetic, experienced and innovative leaders to work together, lead innovation and modernization, drive growth and accelerate the pace of change across our business. We are committed to creating and sustaining a talent engine and culture that attracts, retains and develops high performing team members who consistently deliver operational excellence and business results. As we consider how best to position associates to support our business and drive efficiency and effectiveness, we are guided by four principles: to be customer inspired, omni-always, people-powered and performance-driven.

Divestitures

During fiscal 2020, we divested of five non-core banners, including One Kings Lane in the first quarter, PersonalizationMall.com in the second quarter, Linen Holdings and Christmas Tree Shops in the third quarter and Cost Plus World Market in the fourth quarter, generating approximately $534 million in net proceeds, which are expected to be used to reinvest in our core business operations to drive growth, fund share repurchases, reduce our outstanding debt, or some combination of these. See "Management’s Discussion and Analysis of Financial Condition and Results of Operations" for detailed information relating to these divestitures.

Impact of the COVID-19 Pandemic

As discussed in more detail throughout this Annual Report on Form 10-K, the ongoing coronavirus (COVID-19) pandemic has materially disrupted our operations to date. In compliance with relevant government directives, we closed all of our retail banner stores across the U.S. and Canada as of March 23, 2020, except for most stand-alone BABY and Harmon stores, which were categorized as essential given the nature of their products. In May 2020, we announced a phased approach to re-open our stores in compliance with relevant government directives, and as of the end of July 2020, nearly all of our stores reopened. We cannot predict, however, whether reopened stores will remain open, particularly as the regions in which we operate are experiencing a resurgence of reported new cases of COVID-19 and hospitalizations. In response to the health risks caused by the COVID-19 pandemic, we expanded our recently rolled out BOPIS, contactless Curbside Pickup and Same Day Delivery services to cover the vast majority of our stores.

In conjunction with the temporary store closures, we implemented additional cost reductions, including a furlough of the majority of store associates and a portion of corporate associates. We provided impacted store associates with applicable pay and benefits through April 3, 2020, and impacted corporate associates with pay and benefits through April 18, 2020. In addition, we had continued to pay 100% of the cost of healthcare premiums for all associates who participated in our health plan. Nearly all of the associates who were subject to furlough returned to work as of the third quarter of fiscal 2020. We also implemented a temporary reduction in salaries of our executive team by 30% through May 16, 2020, and a temporary reduction in the quarterly cash compensation of the independent members of the Board of Directors by 30% for the first quarter of fiscal 2020. We also modified our fiscal 2020 capital investment plan, focusing on our core business and key projects that support our digital and omni fulfillment capabilities, including the introduction of BOPIS and contactless Curbside Pickup services, omni inventory management, and digital marketing and personalization.

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Competition

We operate in a highly competitive business environment and compete with other national, regional, local and online retailers that may carry similar lines of merchandise, including department stores, specialty stores, off-price stores, mass merchandise stores and online only retailers. We believe that the key to competing in our industry is to provide best-in-class customer service and customer experiences in stores and online, which includes providing compelling price and value; high-quality and differentiated products, services and solutions; convenience; technology; personalization; and appealing and experiential store environments.

Suppliers

We purchase substantially all of our merchandise in the United States, the majority from domestic sources (who may manufacture overseas) and the balance from importers. We purchase a small amount of our merchandise directly from overseas sources. In fiscal 2020, we purchased our merchandise from approximately 7,800 suppliers with our largest supplier accounting for approximately 7% of our merchandise purchases and the ten largest suppliers accounting for approximately 24% of such purchases. We have no long-term contracts for the purchases of merchandise. We believe that most merchandise, other than brand name goods, is available from a variety of sources and that most brand name goods can be replaced with comparable merchandise.

We are in the early stages of expanding our direct importing and direct sourcing capabilities. We believe that our expanding global sourcing capabilities will allow for a higher penetration of sourced and developed proprietary owned brands in our merchandise assortment.

Distribution

A substantial portion of our merchandise is shipped to stores through a combination of third-party facilities, including cross dock locations, or through our operated distribution facilities that are located throughout the United States. The remaining merchandise is shipped directly from vendors. Merchandise is shipped directly to customers from one of our distribution facilities, stores or from vendors. The majority of our shipments are made by contract carriers depending upon location. See "Item 2 – Properties" for additional information regarding the Company’s distribution facilities.

Marketing

We employ a digital-first, omni-channel approach to marketing that is strategically designed to deliver maximum consumer engagement. The customer-inspired marketing mix includes a comprehensive range of touchpoints, including social, search, mobile SMS, email, digital video, display, content and influencer marketing, online affiliate programs and public relations, as well as traditional broadcast and print media, circulars, catalogs and our well-known "big blue" coupons. We continue to invest in new technology tools that we expect will allow us to make significant strides in integrating our extensive customer data with relevant third-party data, in order to better scale, tailor and personalize marketing communications for our key customer segments.

Customer Care

Our omni-always strategy is rooted in elevating the end-to-end experience for our customers across all channels, brands and banners. Through a customer inspired lens, we invest in capabilities necessary to continuously evolve and deliver a seamless experience to our customers. Our digital-first customer care makes it easy for customers to connect with us through chat, phone, and our digital properties including our newly relaunched mobile apps that offer quick access to self-serve capabilities. Our holistic approach to customer care is designed to make it convenient for our customers to access help wherever and whenever they need it.

Tradenames, Service Marks and Domain Names

We use the service marks "Bed Bath & Beyond," "buybuy BABY," "Harmon," "Face Values" and "Decorist" in connection with our retail services. We have registered trademarks and service marks or are seeking registrations for these and other trademarks and service marks with the United States Patent and Trademark Office. In addition, we have registered or have applications pending with the trademark registries of several foreign countries, including the "Bed Bath & Beyond" name and logo registered in Canada and Mexico and the "buybuy BABY" name and logo registered in Canada. We also own a number of product trademarks. We file patent applications and seek copyright registrations where we deem such to be advantageous to the business. We believe that our name recognition and service marks are important elements of our merchandising strategy.
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We also own a number of domain names, including bedbathandbeyond.com, bedbathandbeyond.ca, buybuybaby.com, buybuybaby.ca, harmondiscount.com, facevalues.com and decorist.com.

People and Culture

Our strategic transformation is based on five key pillars: product, price, promise, place and people. The people pillar of our transformation strategy communicates our commitment to creating and sustaining a talent engine and culture that attracts, retains and develops high performing team members who consistently deliver operational excellence and business results.

We believe that developing and fostering a company culture that supports our value proposition, including aligning the value proposition of our associates with that of our customers, is critical to our strategy. As we consider how best to position associates to support our business and drive efficiency and effectiveness, we are guided by four principles: to be customer inspired, omni-always, people-powered and performance-driven.

In 2020, we continued to assemble a new leadership team with deep industry expertise, and new skill sets, including omnichannel business experience, to complement existing in-house capabilities. As part of further organizational realignment efforts, we are evaluating the current allocation of resources at all levels to best utilize the skills and experience of our associates, while also recognizing the need to recruit new talent and perspectives, to accelerate our transformation. To support associate recruitment and retention, we are modernizing our new total rewards program to provide incentives, recognition and benefit programs that reflect the changing needs of our associates, with an emphasis on supporting associate wellbeing.

As set forth in our Commitment to Equal Opportunity and Diversity statement, we believe that our diverse workforce contributes to the strong bond associates have with customers. We are committed to diversity, equity and inclusion and providing opportunities for professional and personal growth to all associates, regardless of background. We are in the process of collecting associate baseline data and evaluating our demographic profile through various lenses as the first step toward tracking organizational diversity and establishing metric goals. We also will appoint a Chief Diversity Officer in fiscal 2021 and are looking at additional opportunities to establish an inclusive associate community, including continuing to conduct bias assessments, providing unconscious bias training, supporting our first Associate Resource Group (Beyond Black Associates Coalition) and establishing a framework for expanding affinity groups, and promoting events that raise awareness and celebrate diverse experiences.

The health and wellbeing of our customers and associates is one of our top priorities. On March 23, 2020, we temporarily closed all of our retail stores across the US and Canada, other than BABY and Harmon stores, subject to state and local regulations. In connection with these closures and the related furlough of the majority of store associates and a portion of corporate associates, we paid 100% of the health care premiums for furloughed associates. We also initiated a new COVID sick time policy. We implemented rapid response programs for our associates, including COVID protocols and safety tips to keep our teams safe, and also initiated a new Store Safety Plan guided by our medical advisor and national, state, and local guidance. We also launched a microsite to more effectively communicate our COVID plan and policies and serve as a resource for our customers and associates, including mask, cleaning and social distancing requirements, associate temperature checks and other procedures. New policies to address stress and work-life harmony for associates working remotely include a stipend for office supplies, meeting-free lunch hours and dedicated personal focus time on Fridays after noon. Beyond COVID, we are also considering the future of how we work and implementing policies and practices that create a work environment that prioritizes safety, as well as flexibility and associate mental wellbeing.

As of February 27, 2021, we had approximately 37,600 associates, including approximately 31,200 store associates and 4,500 supply chain associates. We invest a great deal of time and effort in our relationship with our associates, and consider that relationship to be good.

Government Regulations

We believe that we are in compliance with all applicable government regulations, including environmental regulations. We do not anticipate any material effects on our capital expenditures, earnings or competitive position as a result of our efforts to comply with applicable government regulations.

Seasonality

Our business is subject to seasonal influences. Generally, our sales volumes are higher in the calendar months of August (back to school), November and December (holiday), and lower in February.

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Available Information

We make available as soon as reasonably practicable after filing with the Securities and Exchange Commission ("SEC"), free of charge, through our websites, www.bedbathandbeyond.com, and http://bedbathandbeyond.gcs-web.com/financial-information/sec-filings, our 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(a) or 15(d) of the Securities Exchange Act of 1934.

ITEM 1A – RISK FACTORS
MACROECONOMIC AND INDUSTRY RISKS
General economic factors beyond our control, including the impact of COVID-19, and changes in the economic climate could adversely affect, and have materially adversely affected, our performance.
General economic factors that are beyond our control could impact our forecasts and actual performance. These factors include, but are not limited to, housing markets, recession, inflation, deflation, consumer credit availability, consumer debt levels, fuel and energy costs, interest rates, tax rates and policy, unemployment trends, the impact of natural disasters such as pandemics, civil disturbances and terrorist activities, foreign currency exchange rate fluctuations, conditions affecting the retail environment for products sold by us and other matters that influence consumer spending and preferences. Changes in the economic climate and the impact of the COVID-19 pandemic have materially adversely affected, and could continue to materially adversely affect, our business, results of operations, financial condition and liquidity.

In March 2020, the World Health Organization declared the COVID-19 outbreak a global pandemic. In an effort to slow the spread of COVID-19, national and local governments in regions in which we operate have enacted various measures, including travel restrictions or bans, restrictions on events and gatherings and various other “social distancing” recommendations. In response to COVID-19, we temporarily closed all retail store locations as of March 23, 2020 (other than BABY and Harmon Face Values stores). On May 8, 2020, we announced a phased approach to re-open a number of stores, subject to state and local regulations, and nearly all of our stores have reopened (sometimes in a limited capacity) as of July 2020. Despite the gradual re-opening of stores, the extent, severity and overall duration of the COVID-19 pandemic, including its recent resurgence, and the temporary store closures have resulted in significant continuing uncertainty, and the overall impact of COVID-19 may continue to materially and adversely impact our business and could also result in the recording of additional non-cash impairment charges. In future periods, our business, results of operations, financial condition and liquidity may be materially adversely impacted by reduced store traffic and consumer spending due to, among other things, significant continued unemployment and economic downturn, as well as consumer anxiety regarding shopping in physical stores. We could also suffer reputational harm or other potential liability if we were to experience widespread transmission of COVID-19 at one or more of our stores or other facilities.

The impacts and potential impacts from the COVID-19 pandemic that could directly or indirectly materially affect our business, results of operations, financial condition and liquidity also include, but are not limited to:
Potential failure of third parties on which we rely, including our suppliers, commercial banks and other external business partners, to meet their obligations to us, or significant disruptions in their ability to do so, which may be caused by their own financial or operational difficulties, or by travel restrictions and border closures;
Negative impact on our employees. The spread of COVID-19 has caused us to modify our business practices (including employee travel and work locations, cancellation of physical participation in meetings, events and conferences and a furlough of the majority of store associates and a portion of corporate associates, nearly all of whom have returned as of the third quarter of fiscal 2020), and we may take further actions as may be required by government authorities or that we determine are in the best interests of our employees;
Potential impact on our ability to meet our obligations to business partners, including under our secured asset-based revolving credit facility (the "ABL Facility"), which contains a springing minimum fixed charge coverage ratio, customary representations, warranties and affirmative and negative covenants, and under our current lease obligations. We have renegotiated and continue to renegotiate payment terms for goods, services and rent. Similar to other retailers, we have also withheld portions of and/or delayed payments to certain of our business partners as we negotiate revisions to our payment terms, in order to further maintain liquidity given the temporary store closures. There can be no assurance that we will be able to successfully renegotiate payment terms with all such business partners, and the ultimate outcome of these activities, including the responses of all business partners, are not yet known;
Significant reductions in demand or significant volatility in demand for our products, which have been and may continue to be caused by, among other things, the temporary inability of consumers to shop at our stores or buy our
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products due to illness, quarantine or other travel restrictions, unemployment or other financial hardship, and shifts in demand away from one or more of our more discretionary or higher priced products to lower priced products; and
Disruptions in the financial markets may materially adversely affect the value of our common stock and availability and cost of credit, which could negatively affect our liquidity.

The COVID-19 pandemic continues to evolve rapidly, and the extent of the adverse impact of COVID-19 on the economy and us will depend, in part, on the length and severity of the measures taken to limit the spread of the virus, including the distribution and effectiveness of vaccines and treatments, and, in part, on the size and effectiveness of the compensating measures taken by governments. We are closely monitoring the potential effects and impact on our business, operations, financial condition and financial performance, including liquidity and capital usage, though the extent is difficult to fully predict at this time due to the rapid evolution of this uncertain situation. For more information on the impact of COVID-19 on our business, see "Item 1 - Business - Impact of the COVID-19 Pandemic."

We operate in the highly competitive retail business where the use of emerging technologies as well as unanticipated changes in the pricing and other practices of competitors may adversely affect our performance.
The retail business is highly competitive. We compete for customers, employees, locations, merchandise, technology, services and other important aspects of the business with many other local, regional and national retailers. These competitors range from specialty retailers to department stores and discounters as well as online and multichannel retailers, some of which are larger than us with significantly greater financial resources. In recent years, competition has further intensified as a result of reduced discretionary consumer spending, increased promotional activity and deep price discounting.

Rapidly evolving technologies are also altering the manner in which we and our competitors communicate and transact with customers. Our execution of the elements of our transformation strategy is designed to adapt to these changes, in the context of competitors’ actions, customers' adoption of new technology and related changes in customer behavior, and presents a specific risk in the event that we are unable to successfully execute our plans or adjust them over time as needed. Further, unanticipated changes in pricing and other practices of our competitors, including promotional activity (particularly during holiday periods), reduced thresholds for free shipping and rapid price fluctuation enabled by technology, may adversely affect our performance. If we are unable to adapt effectively and quickly to a changing competitive landscape and maintain our competitive position, we could experience downward pressure on prices, lower demand for our merchandise, reduced sales and margins, inability to take advantage of new business opportunities and loss of market share. For more information on our strategy, see "Item 1 - Business - Strategy."

Our failure to anticipate and respond in a timely fashion to changes in consumer preferences and demographic factors may adversely affect our business, results of operations and financial condition.
Our success depends on our ability to anticipate and respond in a timely manner to changing merchandise trends, customer demands and demographics in order to maintain and attract customers. Our failure to anticipate, identify or react appropriately to changes in customer tastes, preferences, shopping and spending patterns and other life interest decisions, including as a result of COVID-19, could lead to, among other things, excess inventories or a shortage of products and may adversely affect our business, results of operations and financial condition.

In addition, we must manage our inventory effectively and commensurately with customer demand. Often, we need to order merchandise, and enter into contracts for the purchase and manufacturing of such merchandise, multiple seasons in advance of and frequently before customer trends and preferences are known. The extended lead times for many of our purchases may make it difficult for us to respond rapidly to new or changing trends and preferences. As a result, we are vulnerable to demand and pricing shifts and to misjudgments in the selection and timing of merchandise purchases. If we do not accurately predict our customers’ preferences and demands for our products, our inventory levels will not be appropriate, and our business, results of operations and financial condition may be negatively impacted.

Our business is seasonal in nature, which could negatively affect our results of operations and financial performance.
Our business is subject to seasonal influences, with a significant portion of sales and revenues historically realized during the back to school and holiday seasons. We must carry a significant amount of inventory during this time, and if we are not able to sell the inventory, we may be required to take significant inventory markdowns or write-offs, which could reduce profitability. Similarly, if we do not adequately stock or restock popular products, particularly during the back to school and holiday seasons, and fail to meet customer demand, revenue and customer loyalty may be adversely impacted.

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In addition, our financial results during the holiday season may fluctuate significantly based on many factors, including holiday spending patterns and weather conditions, and any such fluctuation could have a disproportionate effect on our results of operations for the entire fiscal year. Because of the seasonality of our business, our operating results vary considerably from quarter to quarter, and results from any quarter are not necessarily indicative of the results that may be achieved for a full fiscal year.

STRATEGY RISKS

We may face challenges in executing our omnichannel strategy and expanding our operations to ecommerce.
During fiscal 2020, we began executing on elements of our new growth strategy, which we comprehensively communicated during our October 2020 Investor Day. Our ability to implement our strategic direction is based on a number of key assumptions regarding the future economic environment and our ability to meet certain ambitions, goals and targets, among other things. If any of these assumptions (including but not limited to our ability to meet certain ambitions, goals and targets) prove inaccurate in whole or in part, our ability to achieve some or all of the expected benefits of this strategy could be limited, including our ability to meet our stated financial objectives and retain key employees. Factors beyond our control, including but not limited to market and economic conditions, execution risk related to the implementation of our strategy and other challenges and risk factors discussed in this annual report, could limit our ability to achieve some or all of the expected benefits of this strategy. If we are unable to implement this strategy successfully in whole or in part or should the components of the strategy that are implemented fail to produce the expected benefits, our business, results of operations, financial condition and financial performance may be materially and adversely affected.

Additionally, an important part of our strategy involves providing customers with a seamless omnichannel shopping experience. Customer expectations about the methods by which they purchase and receive products or services are evolving, including as a result of the COVID-19 pandemic, and they are increasingly using technology to compare and purchase products. Once products are purchased, customers are seeking alternate options for delivery of those products. The coordinated operation of our network of physical stores and online platforms is fundamental to the success of our omnichannel strategy, and our ability to compete and meet customer expectations may suffer if we are unable to provide relevant customer-facing technology and omnichannel experiences. Consequently, our business, results of operations, financial condition and financial performance could be materially adversely affected. For more information on our strategy, see "Item 1 - Business - Strategy."

Successful execution of our omnichannel strategy is dependent, in part, on our ability to establish and profitably maintain the appropriate mix of digital and physical presence in the markets we serve.
Successful execution of our omnichannel strategy depends, in part, on our ability to develop our digital capabilities in conjunction with optimizing our physical store operations and market coverage, while maintaining profitability. Our ability to develop these capabilities will depend on a number of factors, including our assessment and implementation of emerging technologies and our ability to manage the rapid increase in online orders as a result of the COVID-19 pandemic as well as our ability to drive store traffic upon the expected return of in-person shopping. Our ability to optimize our store operations and market coverage requires active management of our real estate portfolio in a manner that permits store sizes, layouts, locations and offerings to evolve over time, which to the extent it involves the relocation of existing stores or the opening of additional stores will depend on a number of factors, including our identification and availability of suitable locations; our success in negotiating leases on acceptable terms; and our timely development of new stores, including the availability of construction materials and labor and the absence of significant construction and other delays based on weather or other events. These factors could potentially increase the cost of doing business and the risk that our business practices could result in liabilities that may adversely affect our performance, despite the exercise of reasonable care.

There are risks associated with our store network optimization strategies, pursuant to which we plan to close approximately 200 mostly BBB stores by the end of fiscal 2021.
As part of our ongoing business transformation, our Board approved the planned closure of approximately 200 mostly BBB stores by the end of fiscal 2021 as part of our store network optimization program. In connection with this program, we expect to incur one-time costs, including contract termination costs, employee-related costs, professional fees and non-cash impairment charges, which cannot reasonably be estimated at this time. We may not be able to complete the planned store closures in the timeframe, on the terms or in the manner it expects. In addition, the announced program involves numerous risks, including, without limitation, the diversion of our attention from our businesses and operations. If these or other factors impair our ability to successfully implement the program, we may not be able to realize the anticipated benefits of the program, which may materially adversely affect our business, results of operations, financial condition and liquidity. As of February 27, 2021, 144 of the BBB stores have been closed.

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Divestitures or other dispositions could negatively impact our business, and contingent liabilities from businesses that we have sold could adversely affect our financial statements.
We continually assess shareholder value and strategic fit of our existing businesses, and may divest or otherwise dispose of businesses that are deemed not to fit with our strategic plan or are not achieving the desired shareholder value or return on investment. Such transactions pose risks and challenges that could negatively impact our business, including, but not limited to, not being able to achieve the desired strategic and financial benefits or obtain satisfactory terms within our anticipated timeframe or at all. Even after reaching a definitive agreement to sell or dispose a business, the sale is typically subject to satisfaction of pre-closing conditions which may not become satisfied. In addition, divestitures or other dispositions may dilute our earnings per share or adversely impact corporate overhead contribution/allocation associated with divested brands, have other adverse financial and accounting impacts and distract management or result in disputes with buyers. We may also be required to indemnify buyers against known and unknown contingent liabilities related to any businesses we have sold or disposed. The resolution of these contingencies may have a material effect on our financial statements.

In addition, uncertainty about the effect of any potential divestiture on employees, business partners, suppliers and vendors may have an adverse effect on us. These uncertainties may impair our ability to retain and motivate key personnel and could cause business partners, suppliers, vendors and others that deal with us to defer or decline entering into contracts with us or seek to change existing business relationships with us. In addition, if key employees depart because of uncertainty about their future roles and the potential complexities of any potential divestiture, our business could be harmed. If we are unable to divest any such businesses, we may not be able to find another buyer on the same terms and will continue to be subject to the risks of operating such businesses. For more information on our strategy and recent divestitures, see "Item 1 - Business."

OPERATIONAL RISKS

A major disruption of our information technology systems could negatively impact results of operations.

Our results of operations could be negatively impacted by a major disruption of our information technology systems. We rely heavily on these systems to process transactions, manage inventory replenishment, summarize results and control distribution of products. Despite numerous safeguards and careful contingency planning, these systems are still subject to power outages, telecommunication failures, cybercrimes, cybersecurity attacks and other catastrophic events. Our information technology systems could also be adversely affected by changes that result from COVID-19, including, for example, the significant increase in remote working of our employees and the increase in online orders due to restrictions on our retail operations. A major disruption of the systems and their backup mechanisms may cause us to incur significant costs to repair the systems, experience a critical loss of data and/or result in business interruptions.

A breach of our data security systems or those of our third-party service providers could have a negative impact on our results of operations and financial performance due to possible loss of consumer confidence, as well as potential government penalties and private litigation.

We process, transmit, store and maintain certain information about our customers and employees in the ordinary course of business. In connection with certain activities, including, without limitation credit card processing, website hosting, data encryption and software support, we utilize third party service providers, and we believe we take appropriate steps to require such providers to secure such information and to assess their ability to do so. We invest considerable resources in protecting this sensitive information but are still subject to a possible security event, including but not limited to cybercrimes or cybersecurity attacks which may not be detected for a period of time. A breach of our security systems or those of our third-party service providers resulting in unauthorized access to stored personal information could negatively impact our reputation, results of operations and financial performance. Certain aspects of the business, particularly our websites, depend heavily on consumers entrusting personal financial information to be transmitted securely over public networks. A loss of consumer confidence from such a breach could result in lost future sales and have a material adverse effect on our reputation. In addition, a breach or other type of cybercrime or cybersecurity attack could cause us to incur significant costs to restore the integrity of our data and systems, could require the devotion of significant management resources and could result in significant government penalties and private litigation.

In particular, in connection with COVID-19, there has been a spike in cybersecurity attacks as shelter in place orders and work from home measures have led businesses to increase reliance on virtual environments and communications systems, which have been subjected to increasing third-party vulnerabilities and security risks. Malicious hackers may attempt to gain access to our network or data centers; steal proprietary information related to our business, products, employees, and customers; or interrupt our systems and services or those of our customers or others. Although we monitor our networks and continue to enhance our
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security protections, hackers are increasingly more sophisticated and aggressive, and our efforts may be inadequate to prevent all incidents of data breach or theft.

In October 2019, we discovered that a third party acquired e-mail and password information from a source outside of our systems that was used to access less than 1% of our online customer accounts. On October 29, 2019, we sent notifications to certain customers as required by applicable legal requirements. None of our online customers’ payment cards were compromised as a result of this incident. Since becoming aware of this incident, we retained a leading security forensics firm and have implemented remedial measures.

Damage to our reputation in any aspect of our operations could potentially impact our operating and financial results.

Our reputation is based, in part, on perceptions of subjective qualities, so incidents involving us, our products or the retail industry in general that erode customer trust or confidence could adversely affect our reputation and our business. As we increase the number of items available to be shipped directly from a vendor to a customer for home delivery or in-home assembly, any deficiencies in the performance of these third party merchandise vendors and service providers could also have a material adverse effect on our reputation, despite our monitoring controls and procedures. In addition, challenges to our compliance with a variety of social, product, labor and environmental standards could also jeopardize our reputation and lead to adverse publicity, especially in social media. The use of social media by us and consumers has also increased the risk that our reputation could be negatively impacted. The availability of information and opinion on social media is immediate, as is its impact. The opportunity for dissemination of information, including inaccurate and inflammatory information and opinion, is virtually limitless. Information about or affecting us is easily accessible and rapidly disseminated.

Damage to our brand and reputation could potentially impact our operating and financial results, diminish customer trust and generate negative sentiment, as well as require additional resources to rebuild our reputation.

Our success is dependent, in part, on managing costs of labor, merchandise and other expenses that are subject to factors beyond our control.

Our success depends, in part, on our ability to manage operating costs and to look for opportunities to reduce costs. Our ability to meet our labor needs while controlling costs is subject to external factors such as unemployment levels, prevailing wage rates, minimum wage legislation, labor organizing activities and changing demographics. Our ability to find qualified merchandise vendors and service providers and obtain access to products in a timely and efficient manner can be adversely affected by trade restrictions, political instability, financial instability of suppliers, suppliers’ noncompliance with applicable laws, transportation costs, disruptions to our supply chain network serving our stores, distribution facilities and customers due to labor disturbances and other items, and other factors beyond our control, including the impact of the COVID-19 pandemic on temporary store closures and employee furloughs.

Disruptions of our supply chain could have an adverse effect on our operating and financial results.

Disruption of our supply chain capabilities due to trade restrictions, port-related issues such as closures, congestion or delays, political instability, weather, natural disaster, pandemics (including COVID-19), terrorism, product recalls, labor supply or stoppages, financial and/or operational instability of key suppliers and carriers, or other reasons could impair our ability to distribute our products. To the extent we are unable to mitigate the likelihood or potential impact of such events, it could materially and adversely impact our business, results of operations, financial condition and liquidity.

Our success is dependent, in part, on the ability of our employees in all areas of the organization to execute our business plan and, ultimately, to satisfy our customers.

Our ability to attract and retain qualified employees in all areas of the organization may be affected by a number of factors, including geographic relocation of employees, operations or facilities and the highly competitive markets in which we operate, including the markets for the types of skilled individuals needed to support our continued success.

We rely on our management team and other key personnel.

We depend on the skills, working relationships, and continued services of key personnel. In addition, our ability to achieve our operating goals depends on our ability to identify, hire, train, and retain qualified individuals. We compete with other companies both within and outside of our industry for talented personnel, and we may lose key personnel or fail to attract, train, and retain other talented personnel. Any such loss or failure could adversely affect our business, results of operations and financial condition.
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In particular, our continued success will depend in part on our ability to retain the talents and dedication of key employees. If key employees terminate their employment, become ill as a result of the COVID-19 pandemic, or if an insufficient number of employees is retained to maintain effective operations, our business activities may be adversely affected and our management team's attention may be diverted. In addition, we may not be able to locate suitable replacements for any key employees who leave or offer employment to potential replacements on reasonable terms, all of which could adversely affect our business, results of operations and financial condition.

Unusual weather patterns could adversely affect our performance.

Our operating results could be negatively impacted by unusual weather patterns. Frequent or unusually heavy snow, ice or rain storms, hurricanes, floods, tornados or extended periods of unseasonable temperatures could adversely affect our performance.

CAPITAL RISKS

Disruptions in the financial markets could have a material adverse effect on the Company’s ability to access our cash and cash equivalents.

We may have amounts of cash and cash equivalents at financial institutions that are in excess of federally insured limits. While we closely manage our cash and cash equivalents balances to minimize risk, if there were disruptions in the financial markets or continue to be disruptions in the financial markets due to the impact of the COVID-19 pandemic, we cannot be assured that we will not experience losses on our deposits, and it may negatively impact the availability and cost of capital.

Our stock price has been and may continue to be subject to volatility, and this and other factors may affect elements of our capital allocation strategy such as share repurchases, future dividends and debt reduction.

Our stock price has experienced volatility over time and this volatility may continue, in part due to factors such as those mentioned in this Item 1A. Stock volatility in itself may adversely affect shareholder confidence as well as employee morale and retention for those associates who receive equity grants as part of their compensation packages. The impact on employee morale and retention could adversely affect our business performance and financial results. Stock volatility and other factors may also affect elements of our capital allocation strategy, and our ability to use equity to fund acquisitions or raise capital.

As part of our capital allocation strategy, since December 2004, our Board of Directors has authorized several share repurchase programs, and in April 2016, the Board of Directors authorized a quarterly dividend program. Decisions regarding share repurchases and dividends are within the discretion of the Board of Directors, and will be influenced by a number of factors, including the price of our common stock, general business and economic conditions, our financial condition and operating results, the emergence of alternative investment or acquisition opportunities, changes in business strategy and other factors. Changes in, or the elimination of, our share repurchase programs or dividend could have a material adverse effect on the price of our common stock. Our share repurchase program could change, and would be influenced by several factors, including business and market conditions, such as the impact of the COVID-19 pandemic on our stock price. In response to the COVID-19 pandemic, in March 2020, we postponed our plans for share repurchases and suspended the payment of dividends and planned debt reductions. We recommenced share repurchase programs on October 28, 2020 and also entered into accelerated share repurchase programs on October 28, 2020 and January 7, 2021 (as amended on January 29, 2021), totaling $375.0 million. For more information on our dividends and share repurchase programs, see "Management’s Discussion and Analysis of Financial Condition and Results of Operations."

Our business would be adversely affected if we are unable to service our debt obligations.

We have incurred indebtedness under senior unsecured notes and have entered into the ABL Facility. Our ability to pay interest and principal when due, comply with debt covenants or repurchase the senior unsecured notes if a change of control occurs, will depend upon, among other things, sales and cash flow levels and other factors that affect our future financial and operating performance, including prevailing economic conditions and financial and business factors, many of which are beyond our control. Given the current economic environment, and the continuing adverse effects of the COVID-19 pandemic, for example, we may be unable to maintain compliance with the springing minimum fixed charge coverage ratio covenant under the ABL Facility in future periods, to the extent the covenant is applicable under the terms of the ABL Facility, which would result in an event of default under the ABL Facility and could, at the direction of the requisite lenders, result in the acceleration of the obligation to repay the outstanding amounts thereunder if not waived by the applicable lenders.

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If we become unable in the future to generate sufficient cash flow to meet our debt service requirements, we may be forced to take remedial actions such as restructuring or refinancing our debt; seeking additional debt or equity capital; reducing or delaying our business activities, or selling assets. There can be no assurance that any such measures would be successful.

LEGAL AND REGULATORY RISKS

Changes in statutory, regulatory, and other legal requirements at a local, state or provincial and national level, or deemed noncompliance with such requirements, could potentially impact our operating and financial results.

We are subject to numerous statutory, regulatory and legal requirements at a local, state or provincial and national level, and this regulatory environment is subject to constant change. Our operating results could be negatively impacted by developments in these areas due to the costs of compliance in addition to possible government penalties and litigation in the event of deemed noncompliance. Changes in the law or the regulatory environment in the areas of customer, employee or product safety, environmental protection, privacy and information security, wage and hour laws, and international trade policy, among others, could adversely impact our operations and financial results.

Changes to accounting rules, regulations and tax laws, or new interpretations of existing accounting standards or tax laws could negatively impact our operating results and financial position.

Our operating results and financial position could be negatively impacted by changes to accounting rules and regulations or new interpretations of existing accounting standards. Our effective income tax rate could be impacted by changes in accounting standards as well as changes in tax laws or the interpretations of these tax laws by courts and taxing authorities which could negatively impact our financial results. Such changes would include for example, the possible adoption by the United States of additional tariffs, or the disallowance of tax deductions, with respect to imported merchandise.

New, or developments in existing, litigation, claims or assessments could potentially impact our reputation, operating and financial results.

We are involved in litigation, claims and assessments incidental to our business, the disposition of which is not expected to have a material effect on our reputation, financial position or results of operations. It is possible, however, that future results of operations for any particular quarterly or annual period could be materially adversely affected by changes in our assumptions related to these matters. While outcomes of such actions vary, any such claim or assessment against us could negatively impact our reputation, operations and financial results.

A failure of our suppliers to adhere to appropriate laws, regulations or standards could negatively impact our reputation.

We purchase substantially all of our merchandise in the United States, the majority from domestic sources (who may manufacture overseas) and the balance from importers. We purchase a small amount of our merchandise directly from overseas sources. The failure of one of our domestic or foreign suppliers to adhere to labor, environmental, privacy, health and safety laws, regulations and standards could negatively impact our reputation and have a material adverse effect on our business and results of operations.
ITEM 1B – UNRESOLVED STAFF COMMENTS
None.
ITEM 2 – PROPERTIES
Most of our stores are located in suburban areas of medium and large-sized cities. These stores are situated in strip and power strip shopping centers, as well as in major off-price and conventional malls, and in free standing buildings.
As of February 27, 2021, our 1,020 stores are located in all 50 states, the District of Columbia, Puerto Rico and Canada and range in size from approximately 4,000 to 100,000 square feet, but are predominantly between 18,000 and 50,000 square feet. Approximately 85% to 90% of store space is used for selling areas.
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The table below sets forth the locations of our stores as of February 27, 2021:
STORE LOCATIONS  
Alabama15 New York72 
AlaskaNorth Carolina26 
Arizona24 North Dakota
ArkansasOhio26 
California97 Oklahoma
Colorado20 Oregon11 
Connecticut14 Pennsylvania27 
DelawareRhode Island
Florida72 South Carolina15 
Georgia27 South Dakota
HawaiiTennessee19 
IdahoTexas78 
Illinois32 Utah
Indiana14 Vermont
IowaVirginia28 
Kansas10 Washington23 
KentuckyWest Virginia
Louisiana12 Wisconsin10 
MaineWyoming
Maryland14 District of Columbia
Massachusetts23 Puerto Rico
Michigan32 Alberta, Canada15 
Minnesota11 British Columbia, Canada11 
MississippiManitoba, Canada
Missouri16 New Brunswick, Canada
MontanaNewfoundland and Labrador, Canada
NebraskaNova Scotia, Canada
Nevada10 Ontario, Canada28 
New Hampshire10 Prince Edward Island, Canada
New Jersey72 Saskatchewan, Canada
New MexicoTotal1,020 
We lease substantially all of our existing stores. The leases provide for original lease terms that generally range from 10 to 15 years and most leases provide for a series of five year renewal options, often at increased rents, the exercise of which is at our sole discretion. We evaluate leases on an ongoing basis which may lead to renegotiated lease provisions, including rent and term duration, or the possible relocation or closing of stores. We have more than 120 store leases that are up for renewal in 2021, which provide opportunity to evaluate additional store closures and relocations. Certain leases provide for scheduled rent increases (which, in the case of fixed increases, we account for on a straight-line basis over the committed lease term, beginning when we obtain possession of the premises) and/or for contingent rent (based upon store sales exceeding stipulated amounts).
We have distribution facilities, which ship merchandise to stores and customers, totaling approximately 3.4 million square feet, all of which are leased facilities.
As of February 27, 2021, we have approximately 743,000 square feet within 11 leased and owned facilities for procurement and corporate office functions.
ITEM 3 LEGAL PROCEEDINGS

A putative securities class action was filed on April 14, 2020 against our Company and three of our officers and/or directors (Mark Tritton, Mary Winston (the Company’s former Interim Chief Executive Officer) and Robyn D’Elia (the Company’s former Chief Financial Officer and Treasurer)) in the United States District Court for the District of New Jersey (the "New Jersey federal court"). The case, which is captioned Vitiello v. Bed Bath & Beyond Inc., et al., Case No. 2:20-cv-04240-MCA-MAH, asserts claims under §§ 10(b) and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act") on behalf of a putative class of purchasers of our securities from October 2, 2019 through February 11, 2020. The Complaint alleges that certain of our disclosures about financial performance and certain other public statements during the putative class period were materially false or misleading. A similar putative securities class action, asserting the same claims on behalf of the same putative class against the same defendants, was filed on April 30, 2020. That case, captioned Kirkland v. Bed Bath & Beyond
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Inc., et al., Case No. 1:20-cv-05339-MCA-MAH, is also pending in the United States District Court for the District of New Jersey. On August 14, 2020, the court consolidated the two cases and appointed Kavin Bakhda as lead plaintiff pursuant to the Private Securities Litigation Reform Act of 1995. Lead plaintiff and additional named plaintiff Richard Lipka filed an Amended Class Action Complaint on October 20, 2020, on behalf of a putative class of purchasers of our securities from September 4, 2019 through February 11, 2020. Defendants moved to dismiss the Amended Complaint on December 21, 2020.

On July 10, 2020, the first of three related shareholder derivative actions was filed in the New Jersey federal court on behalf of our Company against various present and former directors and officers. The case, which is captioned Salu v. Tritton, et al., Case No. 2:20-cv-08673-MCA-MAH (D.N.J.), asserts claims under §§10(b) and 20(a) of the Exchange Act and for breach of fiduciary duty, unjust enrichment, and waste of corporate assets under state law arising from the events underlying the securities class actions described above and from our repurchases of our own shares during the class period pled in the securities cases. The two other derivative actions, which assert similar claims, are captioned Grooms v. Tritton, et al., Case No. 2:20-cv-09610-SDW-RDW (D.N.J.) (filed July 29, 2020), and Mantia v. Fleming, et al., Case No. 2:20-cv-09763-MCA-MAH (D.N.J.) (filed July 31, 2020). On August 5, 2020, the court signed a stipulation by the parties in the Salu case to stay that action pending disposition of a motion to dismiss in the securities class action, subject to various terms outlined in the stipulation. The parties in all three derivative cases have moved to consolidate them and to apply the Salu stay of proceedings to all three actions. The court granted the motion on October 14, 2020.

On August 28, 2020, another related shareholder derivative action, captioned Schneider v. Tritton, et al., Index No. 516051/2020, was filed in the Supreme Court of the State of New York, County of Kings. The claims pled in the Schneider case are similar to those pled in the three federal derivative cases, except that the Schneider complaint does not plead claims under the Exchange Act. On September 21, 2020, the parties filed a stipulation seeking to stay that action pending disposition of a motion to dismiss in the securities class action, subject to various terms and conditions.

At this time, we are unable to estimate any potential losses that may be incurred and have not recorded a liability for the above matters.

The District Attorney's office for the County of Ventura, together with District Attorneys for other counties in California (together, the "District Attorneys"), recently concluded an investigation regarding the management and disposal at our stores in California of certain materials that may be deemed hazardous or universal waste under California law. On March 19, 2019, the District Attorneys provided us with a settlement demand that included a proposed civil penalty, reimbursement of investigation costs, and certain injunctive relief, including modifications to our existing compliance program, which already includes associate training, on-going review of disposal rules applicable to various product categories, and specialized third-party disposal. During fiscal 2020, we agreed with the District Attorneys on a settlement payment of approximately $1.5 million to resolve the matter. We have also agreed to spend $171,000 over the next 36 months on refinements to our compliance program. Our Company and the District Attorneys executed a Stipulated Judgment to this effect, which was recently filed with the court. As of February 29, 2020, we had recorded an accrual for the estimated probable loss for this matter, and made the related settlement payment during the fourth quarter of fiscal 2020.

While no assurance can be given as to the ultimate outcome of these matters, we do not believe that the final resolution will have a material adverse effect on our consolidated financial position, results or liquidity. We are also a party to various legal proceedings arising in the ordinary course of business, which we do not believe to be material to the Company’s consolidated financial position, results of operations or liquidity.
ITEM 4 – MINE SAFETY DISCLOSURES
Not Applicable.
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PART II
ITEM 5 – MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is traded on The Nasdaq Global Select Market under the symbol BBBY. On March 27, 2021, there were approximately 2,100 shareholders of record of the common stock (without including individual participants in nominee security position listings). On March 27, 2021, the last reported sale price of the common stock was $29.26.
During fiscal 2016, our Board of Directors authorized a quarterly dividend program. During fiscal 2020, 2019 and 2018, total cash dividends of $23.1 million, $85.5 million and $86.3 million were paid, respectively. As a result of the COVID-19 pandemic, we have suspended our quarterly cash dividend payments to support plans to build long-term shareholder value and further strengthen our financial flexibility beyond our cash position. Any quarterly cash dividends to be paid in the future are subject to the determination by the Board of Directors, based on an evaluation of our earnings, financial condition and requirements, business conditions and other factors.
Since 2004 through the end of fiscal 2020, we have repurchased approximately $11.0 billion of our common stock through share repurchase programs. Our purchases of our common stock during the fourth quarter of fiscal 2020 were as follows:
PeriodTotal Number of
Shares Purchased (1)
Average Price
Paid per Share (2)
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans
or Programs (1)
Approximate Dollar
Value of Shares
that May Yet Be
Purchased Under
the Plans or
Programs (1) (2) (3)
November 29, 2020 - December 26, 20203,600 $18.91 3,600 $1,814,413,505 
December 27, 2020 - January 23, 20215,001,700 $20.49 5,001,700 $1,711,930,557 
January 24, 2021 - February 27, 20216,346,000 $20.94 6,346,000 $1,729,038,784 
Total11,351,300 $20.74 11,351,300 $1,729,038,784 
(1) Between December 2004 and December 2020, our Board of Directors authorized, through several share repurchase programs, the repurchase of $12.775 billion of our shares of common stock. Subsequent to the end of fiscal 2020, our Board of Directors expanded the existing share repurchase authorization by an additional $175 million, which increased the total share repurchase authorization to $12.950 billion. We have 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, include shares withheld to cover employee related taxes on vested restricted shares, restricted stock units and performance stock unit awards, as well as shares purchased pursuant to accelerated share repurchase agreements, as defined below. Our share repurchase program could change, and any future share repurchases will be subject to the determination of the Board of Directors, based on an evaluation of our earnings, financial condition and requirements, business and market conditions and other factors, including the restrictions on share repurchases under our secured asset-based revolving credit facility.
(2) Excludes brokerage commissions paid by the Company, if any.
(3) In the third quarter of fiscal 2020, we paid $225.0 million under an accelerated share repurchase agreement (the "ASR Agreement") to JPMorgan Chase Bank, National Association (“JP Morgan”) and received an initial delivery of approximately 4.5 million shares. The Average Price Paid per Share was calculated using the closing market value of the shares on the date the initial shares were delivered. During the fourth quarter of fiscal 2020, we received an additional 6.3 million shares under the ASR Agreement.
On January 7, 2021 (as amended on January 29, 2021), we entered into an additional $150 million accelerated share repurchase agreement ("ASR Agreement 2"), subject to market conditions, pursuant to which we paid $150.0 million to JP Morgan, and received an initial delivery of 5.0 million shares. Subsequent to the end of fiscal 2020, final settlement under ASR Agreement 2 occurred and we received an additional 0.2 million shares.



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Stock Price Performance Graph
The graph shown below compares the performance of our common stock with that of the S&P 500 Index, the S&P Retail Composite Index and the S&P 500 Specialty Retail Index over the same period (assuming the investment of $100 in our common stock and each of the three Indexes on February 27, 2016, and the reinvestment of dividends, if any).
bbby-20210227_g1.jpg


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ITEM 7 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
We are an omnichannel retailer that makes it easy for our customers to feel at home. We sell a wide assortment of merchandise in the Home, Baby, Beauty & Wellness markets and operate under the names Bed Bath & Beyond ("BBB"), buybuy BABY ("BABY"), and Harmon, Harmon Face Values, or Face Values (collectively, "Harmon"). We also operate Decorist, an online interior design platform that provides personalized home design services. In addition, we are a partner in a joint venture, which operates retail stores in Mexico under the name Bed Bath & Beyond.

For fiscal 2020, 2019 and 2018, we accounted for our operations as two operating segments: North American Retail and Institutional Sales, the latter of which did not meet the quantitative thresholds under GAAP and, therefore, was not a reportable segment. The Institutional Sales operating segment was comprised of Linen Holdings, which was divested in October 2020. We will continue to account for our operations as one North American Retail reporting segment going forward.

We have undertaken significant changes over the past year, including extensive changes to executive leadership, as well as development of essential strategies and plans to focus on positioning our business for long-term success. During the past year, as the world responded to the unparalleled challenge of the COVID-19 pandemic, we have taken aggressive and thoughtful steps to safeguard our people and communities while we continue to serve our customers. Similar to many other businesses, the COVID-19 pandemic served as a catalyst to accelerate the pace of change and innovation across our Company, advancing ongoing efforts to reset our cost structure and build a modern, durable model for long-term profitable growth.
We are driving a digital-first, omni-always growth strategy and optimizing our digital and physical store channels to provide our customers with a seamless omni-channel shopping experience. Digital purchases, including web and mobile, can be shipped to a customer from our distribution facilities, directly from vendors, or from a store. Store purchases are primarily fulfilled from that store's inventory or may also be shipped to a customer from one of our distribution facilities, from a vendor, or from another store. Customers can also choose to pick up orders using our newly introduced Buy Online Pickup In Store ("BOPIS") and contactless Curbside Pickup services, as well as return online purchases to a store. Customers can also make purchases through one of our customer contact centers and in-store through The Beyond Store, our proprietary web-based platform. These capabilities allow us to better serve our customers across various channels.

Restructuring and Business Transformation

As part of our business transformation plan, we are pursuing a comprehensive cost restructuring program, to drive improved financial performance over the next two-to-three years. We expect to reinvest a portion of the expected cost savings into future growth initiatives. Key components of the expected financial improvement include:
Approximately $100 million in annual savings from our previously disclosed store network optimization project which includes the planned closure of approximately 200 mostly BBB stores by the end of fiscal 2021. During fiscal 2020, we closed 144 BBB stores. We continue to believe that our physical store channel is an asset for our transformation into a digital-first company, especially with new omni-fulfillment capabilities in BOPIS, Curbside Pickup and Same Day Delivery;
Approximately $200 million in annual savings from product sourcing, through renegotiations with existing vendors; and
Approximately $100 to $150 million in annual selling, general and administrative expense savings from continued optimization of our corporate overhead cost structure and reductions in other discretionary expense. During the second quarter of fiscal 2020, we implemented a workforce reduction of approximately 2,800 roles from across our corporate headquarters and retail stores, designed to further reduce layers at the corporate level, significantly reposition field operations to better serve customers in a digital-first environment, and realign technology, supply chain and merchandising teams to support our strategic growth initiatives.
In connection with the above restructuring and transformation initiatives, we recorded $149.3 million within cost of sales and restructuring and transformation initiative expenses in our consolidated statements of operations for fiscal 2020 for costs associated with our planned store closures as part of the network optimization program for which the store closure process has commenced, workforce reduction and other transformation initiatives. At this point, we are unable to estimate the amount or range of amounts expected to be incurred in connection with future store closures and will provide such estimates as they become available.
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Divestitures and Other Cash Generating Activities
On December 14, 2020, we announced that we entered into a definitive agreement to sell Cost Plus World Market to Kingswood Capital Management, a Los Angeles-based private equity firm. The transaction closed during the fourth quarter of fiscal 2020, generating approximately $63.7 million in proceeds, subject to certain working capital and other adjustments.
On October 11, 2020, we entered into definitive agreements to sell Christmas Tree Shops ("CTS") to Handil Holdings LLC and to sell one of the CTS distribution facilities to an institutional buyer, with a leaseback term of nine months, to provide business continuity for some of our operations currently using the facility. These transactions were completed during the third quarter of fiscal 2020, generating approximately $233.3 million in proceeds, subject to certain working capital and other adjustments.
On October 11, 2020, we entered into a definitive agreement to sell Linen Holdings to The Linen Group, LLC, an affiliate of Lion Equity Partners. On October 24, 2020, we completed the sale of Linen Holdings for approximately $10.1 million, subject to certain working capital and other adjustments.
On February 14, 2020, we entered into a definitive agreement to sell PersonalizationMall.com ("PMall") to 1-800-FLOWERS.COM for $252 million, subject to certain working capital and other adjustments. The buyer was required to close the PMall transaction on March 30, 2020, but failed to do so. Accordingly, we filed an action to require the buyer to close the transaction. On July 20, 2020, we entered into a settlement agreement with respect to the litigation. Under this agreement, 1-800-FLOWERS.COM agreed to move forward with its purchase of PMall for $244.6 million, subject to certain working capital and other adjustments. The transaction closed on August 3, 2020.
During the first quarter of fiscal 2020, we also sold One Kings Lane to a third party for an amount that was not material.
During the fiscal 2019 fourth quarter, we completed a sale-leaseback transaction with respect to approximately 2.1 million square feet of owned real estate, generating over $250 million in net proceeds.

The net proceeds from these transactions and any other potential cash-generating transactions are expected to be used to reinvest in our core business operations to drive growth, fund share repurchases, reduce our outstanding debt, or some combination of these uses.
Impact of the COVID-19 Pandemic

In March 2020, the World Health Organization declared the COVID-19 outbreak a global pandemic. The pandemic has materially disrupted our operations to date. In compliance with relevant government directives, we temporarily closed all of our retail banner stores across the U.S. and Canada as of March 23, 2020, except for most stand-alone BABY and Harmon stores, which were categorized as essential given the nature of their products. In May 2020, we announced a phased approach to reopen our stores in compliance with relevant government directives, and as of the end of July 2020, nearly all of our stores reopened. We cannot predict, however, whether reopened stores will remain open, particularly as the regions in which we operate are experiencing a resurgence of reported new cases of COVID-19 and hospitalizations. In response to the health risks caused by the COVID-19 pandemic, we expanded our recently rolled out BOPIS, contactless Curbside Pickup and Same Day Delivery services to cover the vast majority of our stores.

In conjunction with the temporary store closures, we implemented additional cost reductions, including a furlough of the majority of store associates and a portion of corporate associates. We provided impacted store associates with applicable pay and benefits through April 3, 2020, and impacted corporate associates with pay and benefits through April 18, 2020. In addition, we had continued to pay 100% of the cost of healthcare premiums for all associates who participated in our health plan. Nearly all of the associates who were subject to furlough returned to work as of the third quarter of fiscal 2020. We also implemented a temporary reduction in salaries of our executive team by 30% through May 16, 2020, and a temporary reduction in the quarterly cash compensation of the independent members of the Board of Directors by 30% for the first quarter of fiscal 2020. We also modified our fiscal 2020 capital investment plan, focusing on our core business and key projects that support our digital and omni fulfillment capabilities, including the introduction of BOPIS and contactless Curbside Pickup services, omni inventory management, and digital marketing and personalization.

We have and will continue to seek opportunities to mitigate the impact of the COVID-19 pandemic, including, among others, renegotiating payment terms for goods, services and rent, managing inventory levels, and reducing discretionary spending such as business travel and advertising and expense associated with the maintenance of stores that were temporarily closed. The COVID-19 pandemic materially adversely impacted our results of operations and cash flows in fiscal 2020, and could continue to materially impact results of operations and cash flows as well as our financial condition. Given the uncertainties regarding the spread of the virus, the timing of the economic recovery and the resurgence of the virus, the related financial impact cannot be reasonably predicted or estimated at this time.
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On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted in the United States. The CARES Act is an emergency economic aid package to help mitigate the impact of the COVID-19 pandemic. Among other things, the CARES Act provides certain changes to tax laws, which may impact our results of operations, financial position and cash flows. We are currently implementing certain provisions of the CARES Act, such as deferring employer payroll taxes and utilizing the ability to carry back and deduct losses to offset prior income in previously filed tax returns. As of February 27, 2021, we have deferred $3.1 million of employer payroll taxes, of which 50% are required to be deposited by December 2021 and the remaining 50% by December 2022. During the fiscal year ended February 27, 2021, under the CARES Act, we recorded an additional $41.0 million benefit as a result of the fiscal 2019 net operating losses and a $111.0 million benefit as a result of the fiscal 2020 net operating losses, both of which can now be carried back to prior years during which the federal tax rate was 35%. In addition, we recorded a credit of $33.3 million as an offset to selling, general and administrative expenses as a result of the employee retention credits made available under the CARES Act for U.S. employees and under the Canada Emergency Wage Subsidy for Canadian employees during fiscal 2020.
Summary of Financial Performance
The following represents an overview of our financial performance for the periods indicated, all of which were comprised of fifty-two weeks:
Net sales in fiscal 2020 decreased approximately 17.3% to $9.233 billion over net sales of $11.159 billion in fiscal 2019; net sales in fiscal 2019 decreased approximately 7.2% to $11.159 billion over net sales of $12.029 billion in fiscal 2018. As noted above, the majority of our stores were temporarily closed beginning March 23, 2020, except for most stand-alone BABY and Harmon stores, which remained open through July 2020, subject to state and local regulations. Nearly all stores reopened as of July 2020. The decline in net sales in fiscal 2020 also reflected the impact of the business divestitures and store closures described above.
Net sales consummated through digital channels increased approximately 83% and 2%, respectively, and net sales consummated in-store declined approximately 34% and 14%, respectively, in fiscal 2020 and 2019, relative to the previous year. Net sales consummated through digital channels represented approximately 38% of our net sales for fiscal 2020, approximately 17% of our net sales for fiscal 2019, and approximately 16% of our net sales for fiscal 2018.
As a result of the extended closure of the majority of our stores due to the COVID-19 pandemic and our policy of excluding extended store closures from our comparable sales calculation, we believe that comparable sales was not a meaningful metric for the first quarter of fiscal 2020 and, therefore, not a meaningful metric for fiscal 2020. Comparable sales decreased approximately 6.8% for fiscal 2019 and approximately 1.1% for fiscal 2018.
Comparable sales include sales consummated through all retail channels that have been operating for twelve full months following the opening period (typically four to six weeks). As an omnichannel retailer, customers are able 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 our distribution facilities, stores or vendors.
Sales consummated on a mobile device while physically in a store location and BOPIS orders are recorded as customer facing digital channel sales. Customer orders taken in-store by an associate through The Beyond Store, our proprietary, web-based platform, are recorded as in-store sales. Prior to implementation of BOPIS and contactless Curbside Pickup services, customer orders reserved online and picked up in a store were 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 our control, including the COVID-19 pandemic, 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. Due to their divestitures, One Kings Lane and PMall are excluded from the comparable sales calculation beginning in the second quarter of fiscal 2020, Christmas Tree Shops is excluded from the comparable sales calculation beginning in fiscal November 2020, and Cost Plus World Market is excluded from the comparable sales calculation beginning in fiscal January 2021. Linen Holdings has always been excluded from the comparable sales calculation, as it represents non-retail activity.
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Gross profit for fiscal 2020 was $3.118 billion or 33.8% of net sales, compared with $3.542 billion or 31.7% of net sales for fiscal 2019 and $4.104 billion or 34.1% of net sales for fiscal 2018.
SG&A for fiscal 2020 was $3.224 billion or 34.9% of net sales, compared with $3.732 billion or 33.4% of net sales for fiscal 2019 and $3.681 billion or 30.6% of net sales for fiscal 2018.
Goodwill and other impairments for fiscal 2020 were $127.3 million or 1.4% of net sales compared with $509.2 million or 4.6% of net sales for fiscal 2019 and $509.9 million or 4.2% of net sales for fiscal 2018.
Restructuring and transformation initiative expenses for fiscal 2020 were $102.2 million, or 1.1% of net sales.
Loss on sale of businesses, including impairment of assets held for sale, for fiscal 2020 was $1.1 million and represented the total net loss recognized on divestiture of our One Kings Lane, PMall, Linen Holdings, Christmas Tree Shops, and Cost Plus World Market businesses, which is inclusive of a $54.0 million loss recorded upon classification of certain assets of Cost Plus World Market as held for sale during the third quarter of fiscal 2020.
Interest expense, net was $76.9 million, $64.8 million, and $69.5 million in fiscal 2020, 2019 and 2018, respectively.
Gain on extinguishment of debt of $77.0 million in fiscal 2020 related to partial repayment of senior unsecured notes in August 2020.
The effective tax rate was 55.2%, 19.7%, and 12.4% for fiscal years 2020, 2019 and 2018, respectively. For fiscal 2020, the effective tax rate includes the impact of a number of items, including tax planning strategies we deployed in order to increase our expected net operating loss carryback for fiscal 2020, the benefits relating to the divestitures of CTS, Linen Holdings and Cost Plus, partially offset by the impact of impairment charges for tradename and certain store-level assets and the gain on the divestiture of PMall. The effective tax rate for fiscal 2020 also includes a benefit related to fiscal 2019 net operating loss carry-back under the CARES Act. For fiscal 2019, the effective tax rate reflects the impact of charges, portions of which are non-deductible for tax purposes, for goodwill and other impairments, an incremental charge for markdowns, severance costs, shareholder activity costs and a loss from a sale-leaseback transaction, including transaction costs. For fiscal 2018, the effective tax rate reflects the impact of charges, portions of which are non-deductible for tax purposes, for goodwill and other impairments, severance costs and a gain from the sale of a building.
For fiscal 2020, 2019 and 2018, the effective tax rate included net benefit of approximately $2.1 million, net expense of approximately $4.3 million and net benefits of approximately $12.1 million, respectively, due to the recognition of discrete federal and state tax items.
For fiscal 2020, net loss per diluted share was $1.24 ($150.8 million) and included the unfavorable impact of $0.23 per diluted share related to restructuring and transformation initiative expenses, non-cash impairment charges related to tradename and certain store-level assets and the net loss on sales of businesses, partially offset by the gain on extinguishment of debt and a benefit from the reduction of non-recurring inventory reserves. For fiscal 2019, net loss per diluted share was $4.94 ($613.8 million) and included the unfavorable impact of approximately $5.40 per diluted share from goodwill and other impairments, an incremental charge for markdowns, severance costs, shareholder activity costs and a loss from a sale-leaseback transaction, including transaction costs. For fiscal 2018, net earnings per diluted share was $1.02 ($137.2 million) and included the unfavorable impact of approximately $2.99 per diluted share from goodwill and other impairments, severance costs and a gain from the sale of a building.
For fiscal 2020, the decrease in net loss per diluted share is a result of the decrease in net loss due to the items described above, partially offset by the impact of repurchases of our common stock. For fiscal 2019, the increase in net loss per diluted share was a result of the increase in net loss due to the items described above, partially offset by the impact of repurchases of our common stock.
Capital expenditures for fiscal 2020, 2019 and 2018 were $183.1 million, $277.4 million and $325.4 million, respectively. Approximately 60% of the current year capital expenditures related to pre-planned technology projects, including inventory and warehouse management capabilities such as advanced allocation logic and replenishment strategies to meet changing customer needs. The remaining capital expenditures were primarily related to investments in existing stores.
We continue to review and prioritize our capital needs and remain committed to making the required investments in our infrastructure to help position us for continued growth and success. Key areas of investment include: continuing to improve the presentation and content as well as the functionality, general search and navigation across our customer facing digital channels; improving customer data integration and customer relations management capabilities; continuing to enhance service offerings to
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our customers; continuing to strengthen and deepen our information technology, analytics, marketing and e-commerce groups; and creating more flexible fulfillment options designed to improve our delivery capabilities and lower our shipping costs. These and other investments are expected to, among other things, provide a seamless and compelling customer experience across our omnichannel retail platform. As a result of the COVID-19 pandemic, we are prioritizing essential capital expenditures for fiscal 2020 to drive strategic growth plans, including investments in digital, BOPIS and Curbside Pickup service offerings, and have postponed certain previously planned capital expenditures, including some store remodels.
During fiscal 2020, we opened a total of nine new stores and closed 144 stores. We plan to continue to actively manage our 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 pace of our store openings has slowed, and we have increased the number of store closings. We have more than 120 store leases up for renewal in fiscal 2021, which provide the opportunity to evaluate additional store closures and relocations. Some portion of these stores will be included in our store network optimization program discussed above.
During fiscal 2016, our Board of Directors authorized a quarterly dividend program. During fiscal 2020, 2019 and 2018, total cash dividends of $23.1 million, $85.5 million and $86.3 million were paid, respectively. In March 2020, we suspended our future quarterly declarations of cash dividends as a result of the COVID-19 pandemic. Any future quarterly cash dividend payments on our common stock will be subject to the determination by the Board of Directors, based on an evaluation of our earnings, financial condition and requirements, business conditions and other factors, including the restrictions on the payment of dividends under the secured asset-based revolving credit facility (see "Long Term Debt," Note 7 to the accompanying consolidated financial statements).
In October 2020, we entered into an accelerated share repurchase agreement ("ASR Agreement") with JPMorgan Chase Bank, National Association ("JP Morgan") to repurchase $225.0 million of our common stock. Pursuant to the ASR Agreement, we paid $225.0 million to JP Morgan and received an initial delivery of approximately 4.5 million shares of common stock. In the fourth quarter of fiscal 2020, we received an additional 6.3 million shares under this ASR Agreement. In January 2021, we entered into a second accelerated share repurchase agreement ("ASR Agreement 2") to repurchase an aggregate of $150.0 million of our common stock, subject to market conditions. Pursuant to ASR Agreement 2, we paid $150.0 million to JP Morgan, and received an initial delivery of 5.0 million shares, which was accounted for as a treasury stock transaction and resulted in a $102.5 million increase in treasury stock and reduced the weighted average shares outstanding. We also recorded a $47.6 million decrease in additional paid in capital upon the inception of ASR Agreement 2. Subsequent to the end of fiscal 2020, final settlement under ASR Agreement 2 occurred and we received an additional 0.2 million shares. In addition, subsequent to the end of fiscal 2020, our Board of Directors expanded the existing share repurchase authorization by an additional $175 million, which increased the total share repurchase authorization to $12.950 billion.
In addition, during fiscal 2020, we repurchased approximately 0.6 million shares of our common stock to cover employee related taxes withheld on vested restricted stock, restricted stock units and performance stock unit awards, at a total cost of approximately $5.1 million. During fiscal 2019 and 2018, we repurchased 6.8 million, and 9.1 million shares, respectively, of our common stock at a total cost of approximately $99.7 million and $148.1 million, respectively.
Decisions regarding share repurchases are within the discretion of the Board of Directors, and are influenced by a number of factors, including the price of our common stock, general business and economic conditions, our financial condition and operating results, the emergence of alternative investment or acquisition opportunities, changes in business strategy and other factors. Our share repurchase program could change, and could be influenced by several factors, including business and market conditions, such as the impact of the COVID-19 pandemic on our stock price. We review our alternatives with respect to our capital structure on an ongoing basis. Any future share repurchases will be subject to the determination of the Board of Directors, based on an evaluation of our earnings, financial condition and requirements, business conditions and other factors, including the restrictions on share repurchases under the secured asset-based revolving credit facility (see "Long Term Debt," Note 7 to the accompanying consolidated financial statements).
Operating in the highly competitive retail industry, our performance, 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, including pandemics; 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 our plans for new stores; and the ability to assess and implement technologies in support of our development of our omnichannel capabilities. We cannot predict whether, when or the manner in which these factors could affect our operating results.
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RESULTS OF OPERATIONS
The fiscal years discussed below were each comprised of 52 weeks. The following table sets forth for the periods indicated (i) selected statement of operations data expressed as a percentage of net sales and (ii) the percentage change in dollar amounts from the prior year in selected statement of operations data:
 Fiscal Year Ended
Percentage
of Net Sales
Percentage Change
from Prior Year
February 27,
2021
February 29,
2020
March 2,
2019
February 27,
2021
February 29,
2020
Net sales100.0 %100.0 %100.0 %(17.3)%(7.2)%
Cost of sales66.2 68.3 65.9 (19.7)(3.9)
Gross profit33.8 31.7 34.1 (12.0)(13.7)
Selling, general and administrative expenses34.9 33.4 30.6 (13.6)1.4 
Goodwill and other impairments1.4 4.6 4.2 (75.0)(0.1)
Restructuring and transformation initiative costs1.1 — — 100.0 — 
Loss on sale of businesses, including impairment of assets held for sale (1)
— — — 100.0 — 
Operating loss(3.6)(6.3)(0.7)(51.9)703.4 
Interest expense, net0.8 0.6 0.6 18.7 (6.7)
Gain on extinguishment of debt(0.8)— — 100.0 — 
Loss before provision for income taxes(3.6)(6.9)(1.3)(56.0)388.4 
Benefit from income taxes(2.0)(1.4)(0.2)23.1 679.1 
Net loss(1.6)(5.5)(1.1)(75.4)347.3 
(1) - As a percentage of sales, loss on sale of businesses, including impairment of assets held for sale, is less than 0.1% for the year ended February 27, 2021.
Net Sales
Net sales in fiscal 2020 were $9.233 billion, a decrease of $1.926 billion or approximately 17.3%, compared to $11.159 billion of net sales in fiscal 2019, which decreased $870.2 million or 7.2% from $12.029 billion of net sales in fiscal 2018. The decrease in net sales for fiscal 2020 was primarily due to the temporary nationwide closure of the majority of our stores beginning on March 23, 2020 due to the COVID-19 pandemic, except for most stand-alone BABY and Harmon stores, which remained open during such period, subject to state and local regulations. Nearly all of our stores reopened as of July 2020. The declines in net sales in fiscal 2020 also reflected the impacts of the business divestitures and store closures described above. For fiscal 2019, the decrease in net sales was primarily attributable to a decrease in comparable sales.
During fiscal 2020 and fiscal 2019, net sales consummated through digital channels increased approximately 83% and 2%, respectively, and net sales consummated in-store declined approximately 34% and 14%, respectively from the corresponding period in the prior year. Net sales consummated through digital channels represented approximately 38% of our net sales for fiscal 2020, approximately 17% of our net sales for fiscal 2019, and approximately 16% of our net sales for fiscal 2018.
As a result of the extended closure of the majority of our stores due to the COVID-19 pandemic and our policy of excluding extended store closures from our comparable sales calculation, we believe that comparable sales was not a meaningful metric for the first quarter of fiscal 2020 and, therefore, are not a meaningful metric for fiscal 2020. Comparable sales decreased approximately 6.8% for fiscal 2019.
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Our comparable sales metric considers sales consummated through all retail channels – in-store, online, with a mobile device or through a customer contact center. Our omnichannel environment allows our customers to use more than one channel when making a purchase. We believe 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 our websites; or a customer may research a particular item, and read other customer reviews on our websites before visiting a store to consummate the actual purchase; or a customer may buy an item online for in-store or curbside pickup; 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, we accept 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 our retail operations are integrated and we cannot reasonably track the channel in which the ultimate sale is initiated, we can however, provide directional information on where the sale was consummated.
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 accounted for approximately 34.7%, 35.2% and 35.4%, of net sales in fiscal 2020, 2019, and 2018, respectively, of which we estimate that bed linens accounted for approximately 11% of net sales in each of fiscal 2020, 2019 and 2018. The remaining net sales in fiscal 2020, 2019 and 2018 of 65.3%, 64.8%, and 64.6%, respectively, represented sales of home furnishings. No other individual product category accounted for 10% or more of net sales during fiscal 2020, 2019, and 2018.
Gross Profit
Gross profit in fiscal 2020, 2019 and 2018 was $3.118 billion or 33.8% of net sales, $3.542 billion or 31.7% of net sales, and $4.104 billion or 34.1% of net sales, respectively. The increase in the gross profit margin as a percentage of sales between fiscal 2020 and fiscal 2019 was primarily attributable to the increase in product mix and the leverage of distribution and fulfillment costs, partially offset by the impact of channel mix, including higher net-direct-to-customer shipping expense. In addition, our gross margin for fiscal 2020 included a net benefit of $20.2 million from the reduction of incremental markdown reserves taken in the prior year, partially offset by restructuring and transformation initiatives. Our gross profit margin in the prior year reflected an incremental reserve for future markdowns of approximately $169.8 million related to our transformation initiatives, which was an incremental charge to the actual markdowns recorded in the second and third quarters of fiscal 2019.
In addition, our cost of sales includes cost of merchandise, buying costs and costs of our distribution network, including inbound freight charges, distribution facility costs, receiving costs, internal transfer costs and shipping and handling costs. During the first quarter of fiscal 2020, we reevaluated the costs included in cost of sales as we continue our focus on our digital and omni fulfillment capabilities, including the introduction of BOPIS and contactless Curbside Pickup services. The reevaluation of the costs included in cost of sales favorably impacted the change in gross profit margin as a percentage of net sales by approximately 200 basis points during fiscal 2020. This favorable impact was fully offset by a corresponding unfavorable impact in the change in SG&A as a percentage of net sales and resulted in no net impact to the consolidated statement of operations.
The decrease in the gross profit margin as a percentage of net sales between fiscal 2019 and fiscal 2018 was primarily attributable to a decrease in merchandise margin, as a result of promotional activity and the above-mentioned charge of approximately $169.8 million for incremental markdowns related to our transformation initiatives. This incremental charge for markdowns was the result of our strategic decision to reduce inventory by up to $1.0 billion at retail from the end of the second quarter of fiscal 2019 through the end of fiscal 2020, driven by our inventory rationalization efforts, including reductions of aged and duplicative SKUs within our assortment. This action was taken to reset our inventory levels in both stores and distribution centers, as well as refresh our assortment, providing for newness and higher-margin products, all in an effort to drive customer traffic and support top-line performance.
Selling, General and Administrative Expenses
SG&A was $3.224 billion or 34.9% of net sales in fiscal 2020, $3.732 billion or 33.4% of net sales in fiscal 2019, and $3.681 billion or 30.6% of net sales in fiscal 2018. The increase in SG&A as a percentage of net sales was primarily attributable to increases in fixed costs such as rent and occupancy and depreciation, and consulting costs related to our strategic initiatives, partially offset by decreases in payroll and payroll-related expenses and advertising.
The increase in SG&A as a percentage of net sales between 2019 and 2018 was primarily attributable to, in order of magnitude, increases in payroll and payroll-related expenses (primarily due to severance expense); technology-related expenses, including depreciation; advertising, due in part to the growth in digital advertising; and occupancy expense. Fixed costs, such as occupancy and technology-related expenses, including depreciation, as a percentage of net sales were impacted by the lower sales base in fiscal 2019.
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Goodwill and Other Impairments
Goodwill and other impairments were $127.3 million in fiscal 2020, $509.2 million in fiscal 2019, and $509.9 million in fiscal 2018. For fiscal 2020, impairment charges included $92.9 million related to certain store-level assets (including leasehold improvements and operating lease assets) and tradename impairments of $35.1 million. For fiscal 2019, impairment charges included goodwill impairments of $391.1 million, tradename impairments of $41.8 million, long-lived assets impairments of $75.1 million and other impairments of $1.2 million. For fiscal 2018, goodwill impairments were $325.2 million, tradename impairments were $161.7 million and long-lived assets impairments were $23.0 million. The non-cash pre-tax goodwill impairment charges were primarily the result of a sustained decline in our market capitalization.
Restructuring and Transformation Initiative Expenses
During fiscal 2020, we recorded charges of $102.2 million in connection with our restructuring and transformation initiatives, primarily related to severance costs recorded in connection with the workforce reduction and store network optimization programs described above as well as other restructuring activities. (see "Restructuring Activities," Note 3 to the accompanying consolidated financial statements).
Loss on Sale of Businesses, Including Impairment of Assets Held for Sale
Total net loss recognized on the sale of businesses during fiscal 2020 was $1.1 million, comprised of the following transactions:
On April 13, 2020, we completed the sale of One Kings Lane. Proceeds from the sale were not material.
On August 3, 2020, we completed the sale of PMall for approximately $244.6 million in proceeds, and recognized a gain on the sale of $189.3 million.
On October 24, 2020, we completed the sale of Linen Holdings for approximately $10.1 million in proceeds, and recognized a loss on the sale of $64.6 million.
During the third quarter of fiscal 2020, we completed the sale of Christmas Tree Shops for approximately $233.3 million in proceeds, and recognized a loss on the sale of approximately $53.8 million.
On January 15, 2021, we completed the sale of Cost Plus World Market for approximately $63.7 million in proceeds, and recognized a loss on the sale of $72.0 million, which is inclusive of a $54.0 million charge recorded during the third quarter of fiscal 2020 to remeasure the disposal group that was classified as held for sale to the lower of carrying value or fair value less costs to sell.
Operating Loss
Operating loss for fiscal 2020 was $336.9 million or 3.6% of net sales, $700.1 million or 6.3% of net sales for fiscal 2019, and $87.1 million or 0.7% of net sales in fiscal 2018. The favorable change in operating loss as a percentage of net sales between fiscal 2020 and fiscal 2019 was primarily due to an increase in the gross margin, lower goodwill and other impairments compared to the prior year period, partially offset by increased SG&A expenses and restructuring and transformation initiative expenses. The current year reductions of net sales reflected the impact of the temporary nationwide closure of the majority of our stores due to COVID-19, nearly all of which reopened as of July 2020, as well as the impact of the divestitures.
The increase in operating loss as a percentage of net sales between fiscal 2019 and 2018 was the result of the reductions in gross profit margin, the increase in SG&A as a percentage of net sales and goodwill and other impairments, as described above.
Interest Expense, net
Interest expense, net was $76.9 million, $64.8 million and $69.5 million in fiscal 2020, 2019 and 2018, respectively. For fiscal 2020, the increase in interest expense, net was primarily driven by lower interest income on investments and increased interest costs attributable to our revolving credit facilities, primarily relating to the new ABL Facility, partially offset by lower interest expense primarily related to the repurchase of a portion of the senior unsecured notes in August 2020. For fiscal 2019 and 2018, interest expense, net primarily related to interest on the senior unsecured notes issued in July 2014. Included in interest expense, net was an expense of $2.7 million for fiscal 2018 related to changes in our nonqualified deferred compensation plan ("NQDC") investments, which was fully offset by the corresponding change in the NQDC liability recorded in SG&A, with no net impact to the consolidated statement of earnings. On December 27, 2017, we terminated our nonqualified deferred compensation plan and during fiscal 2018, all participants' balances were liquidated and disbursed to those participants.
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Gain on Extinguishment of Debt
During fiscal 2020, we recorded a $77 million gain on the repurchase of $75 million principal amount of 4.915% senior unsecured notes due August 1, 2034 and $225 million principal of 5.165% senior unsecured notes due August 1, 2044 (see "Long Term Debt," Note 7 to the accompanying consolidated financial statements).
Income Taxes
The effective tax rate was 55.2% for fiscal 2020, 19.7% for fiscal 2019 and 12.4% for fiscal 2018.
For fiscal 2020, the effective tax rate reflects our expectation to carry back the net operating loss to a year in which the tax rate was 35%, and includes the impact of the benefit of certain tax planning strategies the Company deployed, in addition to the losses from the divestitures of CTS, Linen Holdings and Cost Plus, partially offset by the impact of impairment charges for tradename and certain store-level assets, the gain on the divestiture of PMall, a benefit related to fiscal 2019 net operating loss carry-back under the CARES Act, and other discrete tax items resulting in net after tax benefits.
For fiscal 2019, the effective tax rate reflects the impact of charges, portions of which are non-deductible for tax purposes, for goodwill and other impairments, an incremental charge for markdowns, severance costs, shareholder activity costs and a loss from a sale-leaseback transaction, including transaction costs. For fiscal 2018, the effective tax rate reflects the impact of charges, portions of which are non-deductible for tax purposes, for goodwill and other impairments, severance costs and a gain from the sale of a building.
For fiscal 2020, 2019 and 2018, the effective tax rate included net benefit of approximately $2.1 million, net expense of approximately $4.3 million and net benefit of approximately $12.1 million, respectively, due to the recognition of discrete federal and state tax items.
Potential volatility in the effective tax rate from year to year may occur as we are 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 Loss
As a result of the factors described above, the net loss for fiscal 2020, 2019 and 2018, was $150.8 million, $613.8 million and $137.2 million, respectively.
Transformation
We are executing on a comprehensive plan to transform our business and position us for long-term success under the leadership of our President and CEO Mark Tritton, who joined the Company on November 4, 2019. Mr. Tritton has been assessing our operations, portfolio, capabilities and culture and is developing and implementing the initial stages of a strategic plan designed to re-establish our leading position as the preferred omnichannel home destination, which is grounded in five key pillars: product, price, promise, place and people. With these five pillars as our framework, and a singular purpose to make it easy for customers to feel at home, we are embracing a commitment to build and manage a modern, durable omnichannel model.
Early actions include the extensive restructure of our leadership team. Interim leaders were appointed in merchandising, marketing, digital, stores, operations, finance, legal and human resources. During fiscal 2020, we announced the hiring of a new leadership team, consisting of the following:
On March 4, 2020, Joe Hartsig joined the Company as Executive Vice President, Chief Merchandising Officer of the Company and President of Harmon Stores Inc.;
On May 4, 2020, Gustavo Arnal joined the Company as Executive Vice President, Chief Financial Officer and Treasurer;
On May 11, 2020, Rafeh Masood joined the Company as Executive Vice President, Chief Digital Officer;
On May 11, 2020, Gregg Melnick assumed the role of Executive Vice President, Chief Stores Officer. Previously, Mr. Melnick served as the Company’s interim Chief Digital Officer;
On May 18, 2020, John Hartmann joined the Company as Chief Operating Officer of the Company and President, buybuy BABY;
On May 18, 2020, Arlene Hong joined the Company as Executive Vice President, Chief Legal Officer and Corporate Secretary;
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On May 26, 2020, Cindy Davis joined the Company as Executive Vice President, Chief Brand Officer of the Company and President, Decorist; and
On September 28, 2020, Lynda Markoe joined the Company as Executive Vice President, Chief People and Culture Officer.
As discussed in "Overview" above, as part of our business transformation, we are also pursuing deliberate actions as part of our restructuring program to drive profit improvement over the next two-to-three years. We expect to reinvest a portion of the expected cost savings into future growth initiatives.
LIQUIDITY AND CAPITAL RESOURCES
We have been able to finance our operations, including our growth and acquisitions, substantially through internally generated funds. As previously described, we began temporary store closures in March 2020 and the majority of our stores were temporarily closed during the first quarter 2020. Subsequently, we began a measured approach to re-opening our stores, subject to state and local regulations, and nearly all of our stores reopened as of July 2020. During the first quarter of fiscal 2020, we elected to draw down the remaining $236.4 million of available funds under our $250 million revolving credit facility (the "Revolver"), which was refinanced with our $850 million secured asset-based revolving credit facility entered into on June 19, 2020 (the "ABL Facility"). These borrowings were subsequently repaid during the second quarter of fiscal 2020. The new ABL Facility matures on June 19, 2023 and provides us with additional liquidity. Our ability to borrow under the ABL Facility is based upon a specified borrowing base consisting of a percentage of our eligible inventory and credit card receivables as defined in the ABL Facility, net of applicable reserves (See "Long Term Debt," Note 7 to the accompanying consolidated financial statements).
During fiscal 2020, we divested of One Kings Lane, PMall, CTS, Linen Holdings and Cost Plus World Market, generating aggregate net proceeds of approximately $534 million, which are expected be used to reinvest in our core business operations to drive growth, fund share repurchases, reduce our outstanding debt, or some combination of these.
During the second quarter of fiscal 2020, we paid approximately $220.9 million to repurchase $300 million aggregate principal amount of our outstanding 4.915% Senior Notes due 2034 and 5.165% Senior Notes due 2044.
In October 2020, we entered into an accelerated share repurchase agreement ("ASR Agreement") with JP Morgan to repurchase $225.0 million of our common stock. Pursuant to the ASR Agreement, we paid $225.0 million to JP Morgan and received an initial delivery of approximately 4.5 million shares of common stock. In the fourth quarter of fiscal 2020, we received an additional 6.3 million shares under this ASR Agreement. In January 2021, we entered into a second accelerated share repurchase agreement ("ASR Agreement 2") to repurchase an aggregate of $150.0 million of our common stock, subject to market conditions. Pursuant to ASR Agreement 2, we paid $150.0 million to JP Morgan, and received an initial delivery of 5.0 million shares, which was accounted for as a treasury stock transaction and resulted in a $102.5 million increase in treasury stock and reduced the weighted average shares outstanding. We also recorded a $47.6 million decrease in additional paid in capital upon the inception of ASR Agreement 2. Subsequent to the end of fiscal 2020, final settlement under ASR Agreement 2 occurred and we received an additional 0.2 million shares. In addition, subsequent to the end of fiscal 2020, our Board of Directors expanded the existing share repurchase authorization by an additional $175 million, which increased the total share repurchase authorization to $12.950 billion.
We ended fiscal 2020 in a strong cash position, which we anticipate maintaining, to provide us the flexibility to fund our ongoing initiatives and act upon other opportunities that may arise. As of February 27, 2021, we had approximately $1.373 billion in cash and investment securities, a decrease of approximately $33.9 million compared with $1.406 billion as of February 29, 2020. We believe that we can continue to finance our operations through existing and internally generated funds for the next twelve months. In addition, if necessary, we have the ability to borrow under our ABL Facility, subject to customary conditions, including no default, the accuracy of representations and warranties, and borrowing base availability. The ABL Facility contains an anti-cash hoarding provision which limits the availability of loans under the credit facility to $600 million (plus the amount of any incremental first-in-last-out loans) if, after giving effect to any borrowing and the application of proceeds thereof, we have greater than $100 million in unrestricted cash or cash equivalents in the aggregate as of the date of such borrowing. In addition, as a result of the COVID-19 pandemic, for fiscal 2020, we have and continue to take measures to preserve our liquidity, including the suspension of the payment of dividends; postponement of certain capital expenditures and, among other things, renegotiating payment terms for goods, services and rent, managing to lower inventory levels, and reducing discretionary spend such as business travel, advertising and expense associated with the maintenance of stores that were temporarily closed. Similar to other retailers, we withheld portions of and/or delayed payments to certain of our business partners as we seek to renegotiate payment terms, in order to further maintain liquidity given the temporary store closures. In some instances, the renegotiations of lease terms have led to agreements with landlords for rent abatements or rental deferrals. Total payments withheld and/or delayed or deferred as of February 27, 2021 were approximately $9.6 million and are included in current liabilities. During fiscal 2020, we
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recognized reduced rent expense of $10.3 million related to rent abatement concessions. Additional negotiations of payment terms are still in process, and there can be no assurance that we will be able to successfully renegotiate payment terms with all such business partners, and the ultimate outcome of these activities including the responses of certain business partners are not yet known. We are also executing on our business transformation program, which is designed to improve our profitability and includes the planned closure of 200 mostly Bed Bath & Beyond stores under our store network optimization program and workforce reductions as part of our restructuring program.
Fiscal 2020 compared to Fiscal 2019
Net cash provided by operating activities in fiscal 2020 was $268.1 million, compared with $590.9 million in fiscal 2019. The year-over-year decrease in cash provided by operating activities was primarily due to the net decrease in cash provided by components of working capital (primarily merchandise inventories and other current assets, partially offset by accounts payable). This decrease was partially offset by a decrease in net loss, adjusted for non-cash expenses.
Retail inventory, which includes inventory in our distribution facilities for direct to customer shipments, was approximately $1.7 billion at February 27, 2021, a decrease of approximately 18.0% compared to retail inventory at February 29, 2020, which is primarily related to the fiscal 2020 divestitures. We continue to focus on our inventory optimization strategies.
Net cash provided by investing activities in fiscal 2020 was $737.9 million, compared with $91.4 million net cash used in fiscal 2019. In fiscal 2020, net cash provided by investing activities included $386.5 million of redemptions of investment securities and $534.5 million in proceeds from sale of businesses, partially offset by $183.1 million of capital expenditures. In fiscal 2019, net cash provided by investing activities was primarily due to $267.3 million of proceeds from a sale-leaseback transaction and $101.5 million of redemptions of investment securities, net of purchases, partially offset by $277.4 million of capital expenditures.
Net cash used in financing activities for fiscal 2020 was $632.3 million, compared with $182.8 million in fiscal 2019. The increase in net cash used in financing activities was primarily due to net debt repayments of $221.4 million, primarily associated with the repurchase of a portion of the outstanding senior notes during the second quarter of fiscal 2020, an increase of $232.8 million in treasury stock repurchases, and an increase of $47.6 million related to prepayment under share repurchase agreement, partially offset by lower dividend payments of $62.4 million.
Fiscal 2019 compared to Fiscal 2018
Net cash provided by operating activities in fiscal 2019 was $590.9 million, compared with $918.3 million in fiscal 2018. Year over year, we experienced a decrease in net earnings and an increase in cash provided by the net components of working capital (primarily merchandise inventories and accrued expenses and other current liabilities, partially offset by trading investment securities and other current assets).
Retail inventory, which includes inventory in our distribution facilities for direct to customer shipments, was approximately $2.1 billion at February 29, 2020, a decrease of approximately 20.0% compared to retail inventory at March 2, 2019, as we continued our focus on our inventory optimization strategies.
Net cash provided by investing activities in fiscal 2019 was $91.4 million, compared with $509.7 million net cash used in fiscal 2018. In fiscal 2019, net cash provided by investing activities was primarily due to $267.3 million of proceeds from a sale-leaseback transaction and $101.5 million of redemptions of investment securities, net of purchases, partially offset by $277.4 million of capital expenditures. In fiscal 2018, net cash used in investing activities was primarily due to $325.4 million of capital expenditures and $195.5 million of purchases of investment securities, net of redemptions.

Net cash used in financing activities for fiscal 2019 was $182.8 million, compared with $238.6 million in fiscal 2018. The decrease in net cash used in financing activities was primarily due to a year over year decrease in common stock repurchases of $48.4 million.
Other Fiscal 2020 Information
Between December 2004 and December 2020, our Board of Directors authorized, through several share repurchase programs, the repurchase of $12.775 billion of our common stock. Since 2004 through the end of fiscal 2020, we have repurchased approximately $11.0 billion of our common stock through share repurchase programs. We have approximately $1.7 billion remaining of authorized share repurchases as of February 27, 2021. Subsequent to the end of fiscal 2020, our Board of Directors expanded the existing share repurchase authorization by an additional $175 million, which increased the total share repurchase authorization to $12.950 billion. Our share repurchase program could change, and any future share repurchases will be subject to
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the determination of the Board of Directors, based on an evaluation of our earnings, financial condition and requirements, business conditions and other factors, including the restrictions on share repurchases under the Credit Agreement (see "Long Term Debt" Note 7 to the accompanying consolidated financial statements)
During fiscal 2016, our Board of Directors authorized a quarterly dividend program. During fiscal 2020, 2019 and 2018, total cash dividends of $23.1 million, $85.5 million and $86.3 million were paid, respectively. In March 2020, we suspended our future quarterly declarations of cash dividends as a result of the COVID-19 pandemic. Any future quarterly cash dividend payments on our common stock will be subject to the determination by the Board of Directors, based on an evaluation of our earnings, financial condition and requirements, business conditions and other factors, including the restrictions on the payment of dividends under the secured asset-based revolving credit facility (see "Long Term Debt," Note 7 to the accompanying consolidated financial statements).
We have contractual obligations consisting mainly of principal and interest related to the senior unsecured notes, operating leases for stores, offices, distribution facilities and equipment, purchase obligations, and other long-term liabilities which we are obligated to pay as of February 27, 2021 as follows:
(in thousands)TotalLess than 1 year1-3 years4-5 yearsAfter 5
years
Senior unsecured notes (1)
$1,195,387 $— $— $295,377 $900,010 
Interest on senior unsecured notes (1) 
1,007,362 56,997 113,994 97,383 738,988 
Operating lease obligations (2)
2,357,302 462,257 752,567 507,143 635,335 
Purchase obligations (3)
988,765 988,765 — — — 
Other long-term liabilities (4)
171,902 171,902 — — — 
Total Contractual Obligations$5,720,718 $1,679,921 $866,561 $899,903 $2,274,333 
(1)   On July 17, 2014, we 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. In fiscal 2020, we purchased and retired approximately $75.0 million of the 4.915% senior unsecured notes due 2034 and approximately $225.0 million of the 5.165% senior unsecured notes due 2044.
(2)  The amounts presented represent the undiscounted future minimum lease payments under non-cancelable operating leases, inclusive of a financing obligation in the amount of $20.6 million related to operating leases entered into as a result of a sale-leaseback transaction completed during fiscal 2019.  In addition to minimum rent, certain of the Company's leases require the payment of additional variable costs for insurance, maintenance and other costs. These additional amounts are not included in the table of contractual commitments as the timing and/or amounts of such payments are not known.  As of February 27, 2021, we have entered leases which have not yet commenced for two new or relocated locations planned for opening in fiscal 2021, for which aggregate minimum rental payments over the term of the leases are approximately $7.7 million. Such amounts are included in the table above, but have not been recorded in the consolidated balance sheet as of February 27, 2021.
(3)   Purchase obligations primarily consist of purchase orders for merchandise.
(4)   Other long-term liabilities are primarily comprised of income taxes payable, workers' compensation and general liability reserves and various other accruals and are recorded as Other Liabilities and Income Taxes Payable in the consolidated balance sheet as of February 27, 2021. The amounts associated with these other long-term liabilities have been reflected only in the total column in the table above as the timing and / or amount of any cash payment is uncertain.
SEASONALITY
Our business is subject to seasonal influences. Generally, our sales volumes are higher in the calendar months of August, November, and December, and lower in February.
INFLATION
We do not believe that our operating results have been materially affected by inflation during the past year. There can be no assurance, however, that our operating results will not be affected by inflation in the future.
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CRITICAL ACCOUNTING POLICIES
The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires us to establish accounting policies and to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. We base our estimates on historical experience and on other assumptions that we believe to be relevant under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. In particular, judgment is used in areas such as inventory valuation, impairment of long-lived assets, goodwill and other indefinite lived intangible assets, accruals for self-insurance and income and certain other taxes. Actual results could differ from these estimates.
Inventory Valuation: Merchandise inventories are stated at the lower of cost or market. Inventory costs are primarily calculated using the weighted average retail inventory method.
Under the retail inventory method, the valuation of inventories at cost and the resulting gross margins are calculated by applying a cost-to-retail ratio to the retail values of inventories. The inputs associated with determining the cost-to-retail ratio include: merchandise purchases, net of returns to vendors, discounts and volume and incentive rebates; inbound freight expenses; duty, insurance and commissions.
The retail inventory method contains certain management judgments that may affect inventory valuation. At any one time, inventories include items that have been written down to our best estimate of their realizable value. Judgment is required in estimating realizable value and factors considered are the age of merchandise, anticipated demand based on factors such as customer preferences and fashion trends, as well as anticipated markdowns to reduce the price of merchandise from its recorded retail price to a retail price at which it is expected to be sold in the future. These estimates are based on historical experience and current information about future events which are inherently uncertain. Actual realizable value could differ materially from this estimate based upon future customer demand or economic conditions, including the duration and severity of the COVID-19 pandemic.
We estimate our reserve for shrinkage throughout the year based on historical shrinkage and any current trends, if applicable. Actual shrinkage is recorded at year end based upon the results of our physical inventory counts for locations at which counts were conducted. For locations where physical inventory counts were not conducted in the fiscal year, an estimated shrink reserve is recorded based on historical shrinkage and any current trends, if applicable. Historically, our shrinkage has not been volatile.
We accrue for merchandise in transit once we take legal ownership and title to the merchandise; as such, an estimate for merchandise in transit is included in our merchandise inventories.
Impairment of Long-Lived Assets: We review long-lived assets for impairment when events or changes in circumstances indicate the carrying value of these assets may exceed their current fair values. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the assets. Judgment is required in estimating the fair value of the assets including assumptions related to sales growth rates and market rental rates. These estimates are based on historical experience and current information about future events which are inherently uncertain. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated.
In fiscal 2020 and 2019, we recorded $92.9 million and $75.1 million, respectively, of non-cash pre-tax impairment charges within goodwill and other impairments in the consolidated statement of operations for certain store-level assets, including leasehold improvements and operating lease assets. In fiscal 2018, we recorded a $23.0 million non-cash pre-tax impairment charge within goodwill and other impairments in the consolidated statement of operations for certain store-level assets. Of the stores impaired during fiscal 2020, partial impairments were recorded at 136 stores, of which 41 were subsequently divested during 2020, resulting in a remaining net book value of long-lived assets at risk of $89.7 million as of February 27, 2021, inclusive of leasehold improvements and right-of-use assets. We will continue to monitor these stores closely. If actual results differ from the estimated undiscounted future cash flows or the estimated price market participants would be willing to pay to sublease store operating leases and acquire remaining store assets, which among other factors, may be impacted by the duration and severity of the COVID-19 pandemic, we may be exposed to additional impairment losses that may be material. If events or market conditions affect the estimated fair value to the extent that a long-lived asset is impaired, we will adjust the carrying value of these long-lived assets in the period in which the impairment occurs.
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Goodwill and Other Indefinite Lived Intangible Assets: We review goodwill and other intangibles that have indefinite lives for impairment annually as of the end of the fiscal year or when events or changes in circumstances indicate the carrying value of these assets might exceed their current fair values. Impairment testing is based upon the best information available, including estimates of fair value which incorporate assumptions marketplace participants would use in making their estimates of fair value. Significant assumptions and estimates are required, including, but not limited to, projecting future cash flows, determining appropriate discount rates, margins, growth rates, and other assumptions, to estimate the fair value of goodwill and indefinite lived intangible assets. Although we believe that the assumptions and estimates made are reasonable and appropriate, different assumptions and estimates could materially impact our reported financial results. In addition, sustained declines in our stock price and related market capitalization could impact key assumptions in the overall estimated fair values of our reporting units and could result in non-cash impairment charges that could be material to our consolidated balance sheet or result of operations. Prior to fiscal 2018, we had not recorded an impairment to our goodwill and other indefinite lived intangible assets.
In fiscal 2018, we recognized non-cash pre-tax goodwill impairment charges of $285.1 million and $40.1 million for the North American Retail and Institutional Sales reporting units, respectively. As of June 1, 2019, we completed a quantitative impairment analysis of goodwill related to our reporting units by comparing the fair value of a reporting unit with its carrying amount. We performed a discounted cash flow analysis and market multiple analysis for each reporting unit. Based upon the analysis performed, we determined that goodwill was fully impaired and recognized a non-cash pre-tax goodwill impairment charge of $391.1 million for the North American Retail reporting unit. The non-cash pre-tax impairment charge was primarily the result of a sustained decline in our market capitalization.
Other indefinite lived intangible assets were recorded as a result of acquisitions and primarily consist of tradenames. We value our tradenames using a relief-from-royalty approach, which assumes the value of the tradename is the discounted cash flows of the amount that would be paid by a hypothetical market participant had they not owned the tradename and instead licensed the tradename from another company. For fiscal 2020, 2019 and 2018, for certain other indefinite lived intangible assets, we completed a quantitative impairment analysis by comparing the fair value of the tradenames to their carrying value and recognized non-cash pre-tax tradename impairment charges of $35.1 million, $41.8 million and $161.7 million, respectively, within goodwill and other impairments in the consolidated statement of operations. For the remaining other indefinite lived intangible assets, we assessed qualitative factors as of February 27, 2021 in order to determine whether any events and circumstances existed which indicated that it was more likely than not that the fair value of these other indefinite lived assets did not exceed their carrying values and concluded no such events or circumstances existed which would require an impairment test be performed. As of February 27, 2021, we have $22.0 million of remaining other indefinite lived intangible assets. If actual results differ from the estimated future cash flows, which, among other factors, may be impacted by the duration and severity of the COVID-19 pandemic, we may be exposed to additional impairment losses that may be material. In the future, if events or market conditions affect the estimated fair value to the extent that an asset is impaired, we will adjust the carrying value of these assets in the period in which the impairment occurs.
Self-Insurance: We utilize a combination of insurance and self-insurance for a number of risks including workers’ compensation, general liability, cyber liability, property liability, automobile liability and employee related health care benefits (a portion of which is paid by our employees). Liabilities associated with the risks that we retain are not discounted and are estimated by considering historical claims experience, demographic factors, severity factors and other actuarial assumptions. Although our claims experience has not displayed substantial volatility in the past, actual experience could materially vary from our historical experience in the future. Factors that affect these estimates include but are not limited to: inflation, the number and severity of claims and regulatory changes. In the future, if we conclude an adjustment to self-insurance accruals is required, the liability will be adjusted accordingly.
Beginning in the fourth quarter of fiscal 2020, we began insuring portions of our workers' compensation and medical insurance through a wholly owned captive insurance subsidiary (the "Captive") to enhance our risk financing strategies. The Captive is subject to regulations in Vermont, including those relating to its levels of liquidity. The Captive was in compliance with all regulations as of February 27, 2021. As of February 27, 2021, the cash and cash equivalents at the Captive were $43.1 million.
Taxes: We account for our income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to the differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period that includes the enactment date.
On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Act. The Tax Act included a mandatory one-time tax on accumulated earnings of foreign subsidiaries, and as a result, all previously
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unremitted earnings for which no U.S. deferred tax liability had been previously accrued has now been subject to U.S. tax. Notwithstanding the U.S. taxation of these amounts, we intend to continue to reinvest the unremitted earnings of our Canadian subsidiary. Accordingly, no additional provision has been made for U.S. or additional non-U.S. taxes with respect to these earnings, except for the transition tax resulting from the Tax Act. In the event of repatriation to the U.S., it is expected that such earnings would be subject to non-U.S. withholding taxes offset, in whole or in part, by U.S. foreign tax credits.
We recognize the tax benefit from an uncertain tax position only if it is at least more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon settlement with the taxing authorities.
Potential volatility in the effective tax rate from year to year may occur as we are 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.
We also accrue for certain other taxes as required by our operations.
Judgment is required in determining the provision for income and other taxes and related accruals, and deferred tax assets and liabilities. In the ordinary course of business, there are transactions and calculations where the ultimate tax outcome is uncertain. Additionally, our various tax returns are subject to audit by various tax authorities. Although we believe that our estimates are reasonable, actual results could differ from these estimates.
FORWARD-LOOKING STATEMENTS
This Form 10-K and Management’s Discussion and Analysis of Financial Condition and Results of Operations contain forward-looking statements within the meaning of Section 21 E of the Securities Exchange Act of 1934 including, but not limited to, our progress and anticipated progress towards our long-term objectives, as well as more generally the status of our future liquidity and financial condition. 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, preliminary, and similar words and phrases, although the absence of those words does not necessarily mean that statements are not forward-looking. Our 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; risks associated with the COVID-19 pandemic and the governmental responses to it, including its impacts across our businesses on demand and operations, as well as on the operations of our suppliers and other business partners, and the effectiveness of our actions taken in response to these risks; 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 us; 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, including our strategic restructuring program and store network optimization strategies; 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, and other factors such as natural disasters, pandemics, including the COVID-19 pandemic, 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 our plans for new stores; the ability to establish and profitably maintain the appropriate mix of digital and physical presence in the markets we serve; the ability to assess and implement technologies in support of our development of our omnichannel capabilities; the ability to effectively and timely adjust our plans in the face of the rapidly changing retail and economic environment, including in response to the COVID-19 pandemic; uncertainty in financial markets; volatility in the price of our common stock and its effect, and the effect of other factors, including the COVID-19 pandemic, on our capital allocation strategy; risks associated with the ability to achieve a successful outcome for our business concepts and to otherwise achieve our business strategies; the impact of intangible asset and other impairments; disruptions to our information technology systems, including but not limited to security breaches of systems protecting consumer and employee information or other types of cybercrimes or cybersecurity attacks; reputational risk arising from challenges to our 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; and foreign currency exchange rate fluctuations. Except as required by law, we do not undertake any obligation to update our forward-looking statements.
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ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our exposure to market risk for changes in interest rates relates primarily to our investment securities and the ABL Facility. As of February 27, 2021, our investments include cash and cash equivalents of approximately $1.353 billion, and long term investments in auction rate securities of approximately $19.4 million, at weighted average interest rates of 0.01% and 0.09%, respectively. The book value of these investments is representative of their fair values.
Our senior unsecured notes have fixed interest rates and are not subject to interest rate risk. As of February 27, 2021, the fair value of the senior unsecured notes was $1.118 billion, which is based on quoted prices in active markets for identical instruments compared to the carrying value of approximately $1.195 billion.
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ITEM 8 – FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following are included herein:
Consolidated Balance Sheets as of February 27, 2021 and February 29, 2020
Consolidated Statements of Operations for the fiscal years ended February 27, 2021, February 29, 2020, and March 2, 2019
Consolidated Statements of Comprehensive (Loss) Income for the fiscal years ended February 27, 2021, February 29, 2020, and March 2, 2019
Consolidated Statements of Shareholders’ Equity for the fiscal years ended February 27, 2021, February 29, 2020, and March 2, 2019
Consolidated Statements of Cash Flows for the fiscal years ended February 27, 2021, February 29, 2020, and March 2, 2019

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BED BATH & BEYOND INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except per share data)
February 27,
2021
February 29,
2020
Assets
Current assets:
Cash and cash equivalents$1,352,984 $1,000,340 
Short term investment securities 385,642 
Merchandise inventories1,671,909 2,093,869 
Prepaid expenses and other current assets595,152 248,342 
Assets held-for-sale 98,092 
Total current assets3,620,045 3,826,285 
Long term investment securities19,545 20,380 
Property and equipment, net918,418 1,430,604 
Operating lease assets1,587,101 2,006,966 
Other assets311,821 506,280 
Total assets$6,456,930 $7,790,515 
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable$986,045 $944,194 
Accrued expenses and other current liabilities636,329 675,776 
Merchandise credit and gift card liabilities312,486 340,407 
       Current operating lease liabilities360,061 463,005 
       Liabilities related to assets held-for-sale 43,144 
Total current liabilities2,294,921 2,466,526 
Other liabilities82,279 204,926 
Operating lease liabilities1,509,767 1,818,783 
Income taxes payable102,664 46,945 
Long term debt1,190,363 1,488,400 
Total liabilities5,179,994 6,025,580 
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 343,241 and 343,683, respectively; outstanding 109,621 and 126,528 shares, respectively
3,432 3,436 
Additional paid-in capital2,152,135 2,167,337 
Retained earnings10,225,253 10,374,826 
Treasury stock, at cost; 233,620 and 217,155 shares, respectively
(11,048,284)(10,715,755)
Accumulated other comprehensive loss(55,600)(64,909)
Total shareholders' equity1,276,936 1,764,935 
Total liabilities and shareholders' equity$6,456,930 $7,790,515 
See accompanying Notes to Consolidated Financial Statements.
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BED BATH & BEYOND INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per share data)
Twelve Months Ended
February 27, 2021February 29, 2020March 2, 2019
Net sales$9,233,028 $11,158,580 $12,028,797 
Cost of sales6,114,947 7,616,920 7,924,817 
   Gross profit3,118,081 3,541,660 4,103,980 
Selling, general and administrative expenses3,224,363 3,732,498 3,681,210 
Goodwill and other impairments 127,341 509,226 509,905 
Restructuring and transformation initiative expenses102,202   
Loss on sale of businesses, including impairment of assets held for sale1,062   
   Operating loss(336,887)(700,064)(87,135)
Interest expense, net76,913 64,789 69,474 
Gain on extinguishment of debt(77,038) — 
   Loss before benefit from income taxes(336,762)(764,853)(156,609)
Benefit from income taxes(185,989)(151,037)(19,385)
Net loss$(150,773)$(613,816)$(137,224)
Net loss per share - Basic$(1.24)$(4.94)$(1.02)
Net loss per share - Diluted$(1.24)$(4.94)$(1.02)
Weighted average shares outstanding - Basic121,446 124,352 134,292 
Weighted average shares outstanding - Diluted121,446 124,352 134,292 
Dividends declared per share$ $0.68 $0.64 
See accompanying Notes to Consolidated Financial Statements.
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Consolidated Statements of Comprehensive Loss
(in thousands)
Twelve Months Ended
February 27, 2021February 29, 2020March 2, 2019
Net loss$(150,773)$(613,816)$(137,224)
Other comprehensive (loss) income:
Change in temporary impairment of auction rate securities, net of taxes(617)276 366 
Pension adjustment, net of taxes(1,396)(4,791)(482)
 Reclassification adjustment on partial settlement of the pension plan, net of taxes1,522   
Currency translation adjustment9,800 (1,784)(10,198)
Other comprehensive income (loss)9,309 (6,299)(10,314)
Comprehensive loss$(141,464)$(620,115)$(147,538)
See accompanying Notes to Consolidated Financial Statements.
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Consolidated Statements of Shareholders' Equity
(in thousands)
Common StockAdditional Paid-
in Capital
Retained
Earnings
Treasury StockAccumulated Other
Comprehensive
Loss
Total
SharesAmountSharesAmount
Balance at March 3, 2018341,795 $3,418 $2,057,975 $11,343,503 (201,297)$(10,467,972)$(48,296)$2,888,628 
Net loss(137,224)(137,224)
Other comprehensive loss, net of tax(10,314)(10,314)
Effect of Adoption of ASU 2014-09(4,221)(4,221)
Dividend declared(89,171)(89,171)
Issuance of restricted shares, net320 3 (3) 
Payment and vesting of performance stock units464 5 (5) 
Stock-based compensation expense, net60,657 60,657 
Director fees paid in stock3 49 49 
Repurchase of common stock, including fees(9,052)(148,073)(148,073)
Balance at March 2, 2019342,582 3,426 2,118,673 11,112,887 (210,349)(10,616,045)(58,610)2,560,331 
Net loss(613,816)(613,816)
Other comprehensive loss, net of tax(6,299)(6,299)
Effect of Adoption of ASU 2016-02(40,700)(40,700)
Dividend declared(83,545)(83,545)
Shares sold under employee stock option plans, net of taxes139 1 2,345 2,346 
Issuance of restricted shares, net370 4 (4) 
Payment and vesting of performance stock units580 5 (5) 
Stock-based compensation expense, net46,159 46,159 
Director fees paid in stock12 169 169 
Repurchase of common stock, including fees(6,806)(99,710)(99,710)
Balance at February 29, 2020343,683 3,436 2,167,337 10,374,826 (217,155)(10,715,755)(64,909)1,764,935 
Net loss(150,773)(150,773)
Other comprehensive loss, net of tax9,309 9,309 
Dividend forfeited1,200 1,200 
Forfeiture of restricted shares, net(786)(8)8  
Payment and vesting of performance stock units344 4 (4) 
Stock-based compensation expense, net32,344 32,344 
Accelerated share repurchase program(47,550)(15,833)(327,450)(375,000)
Repurchase of common stock, including fees(632)(5,079)(5,079)
Balance at February 27, 2021343,241 3,432 2,152,135 10,225,253 (233,620)(11,048,284)(55,600)1,276,936 
See accompanying Notes to Consolidated Financial Statements.
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BED BATH & BEYOND INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(in thousands)
Twelve Months Ended
February 27, 2021February 29, 2020March 2, 2019
Cash Flows from Operating Activities:   
Net loss$(150,773)$(613,816)$(137,224)
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization340,912 342,511 338,825 
Loss on sale leaseback transaction 27,357  
Gain on sale of building  (29,690)
Gain on debt extinguishment(77,038) (412)
Loss on sale of businesses including impairment of assets held for sale1,062   
Goodwill and other impairments127,341 509,226 509,905 
Stock-based compensation31,594 45,676 58,514 
Deferred income taxes148,741 (145,543)(104,089)
Other(396)(3,446)(814)
Decrease (increase) in assets:
Merchandise inventories64,947 506,334 106,928 
Trading investment securities 21 86,277 
Other current assets(387,172)(4,781)269,186 
Other assets1,519 218 218 
(Decrease) increase in liabilities:
Accounts payable168,556 (124,206)(90,657)
Accrued expenses and other current liabilities15,538 61,864 (77,147)
Merchandise credit and gift card liabilities(12,110)1,154 16,016 
Income taxes payable54,958 (22,783)8,360 
Operating lease assets and liabilities, net(32,813)(2,899)— 
Other liabilities(26,758)14,054 (35,918)
Net cash provided by operating activities268,108 590,941 918,278 
Cash Flows from Investing Activities:
Purchases of held-to-maturity investment securities (443,500)(734,424)
Redemption of held-to-maturity investment securities386,500 545,000 538,925 
Net proceeds from sales of businesses534,457   
Proceeds from sale-leaseback transaction 267,277 — 
Proceeds from sale of a building  11,183 
Capital expenditures(183,077)(277,401)(325,366)
Net cash provided by (used in) investing activities737,880 91,376 (509,682)
Cash Flows from Financing Activities:
Borrowing of long-term debt236,400   
Repayments of long-term debt(457,827) (4,224)
Repurchase of common stock, including fees(332,529)(99,710)(148,073)
Prepayment under share repurchase agreement(47,550)  
Payment of dividends(23,108)(85,482)(86,287)
Payment of deferred financing fees(7,690)