Table of the outbreak and impact to the economy continues to evolve and the full extent of the impact is uncertain as of the date of this filing. The outbreak has already brought a material disruption to the operations of the Company. As a result of ‘social distancing’ measures put into effect in March 2020, the Company began to temporarily close certain store locations that did not have a health and personal care department and as of March 23, 2020, all retail banner stores across the U.S. and Canada have been temporarily closed except for stand-alone Baby and Harmon store locations, subject to state and local regulations. Customers can continue to order products online and with mobile devices.

In conjunction with the temporary store closures, the Company implemented additional cost reductions, including a furlough of the majority of store associates and a portion of corporate associates until at least May 16, 2020. The Company 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. During the period in which furloughed associates are not paid, the Company will continue to pay 100% of the cost of healthcare premiums for all these associates who currently participate in the Company’s health plan, until further notice. Furloughed associates are also able to apply for unemployment benefits, if eligible. The Company also implemented a temporary reduction in salaries of the Company’s executive team by 30%, which will continue until at least May 16, 2020, and a temporary reduction in the quarterly cash compensation of the independent directors of the Board of Directors by 30%.

Further, 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 of COVID-19 pandemic. Among other things, the CARES Act provides certain changes to tax laws, which may impact the Company’s results of operations, financial position and cash flows. The Company is currently implementing applicable benefits 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. Due to the timing of the enactment of the CARES Act, the Company is still evaluating the impact that the CARES Act may have on the Company’s results of operations, liquidity and financial position.

The Company 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 to lower inventory levels, and reducing discretionary spend such as business travel, advertising and expense associated with the maintenance of stores that are temporarily closed. The COVID-19 pandemic could materially impact the Company’s financial position, results of operations and cash flows in fiscal 2020. Given the uncertainty regarding the spread of the virus and the timing of the economic recovery, the related financial impact cannot be reasonably predicted or estimated at this time.

~~The results of operations for the fiscal year ended March 3, 2018, include Decorist since the date of acquisition, March 6, 2017.~~

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

Net sales in fiscal 2019 (fifty-two weeks) decreased approximately 7.2% to $11.159 billion; net sales in fiscal 2018 (fifty-two weeks) decreased approximately 2.6% to $12.029 billion over net sales of $12.349 billion in fiscal 2017 (fifty-three weeks).

Comparable sales in fiscal 2019 (fifty-two weeks) decreased by approximately 6.8%, as compared to a decrease of approximately 1.1% for fiscal 2018 (fifty-two weeks) and a decrease of approximately 1.3% for fiscal 2017 (fifty-three weeks). Comparable sales percentages are calculated based on an equivalent number of weeks in each annual period. For fiscal 2019, comparable sales consummated through customer facing digital channels increased in the low-single-digit percentage range, while comparable sales consummated in-store declined in the high-single-digit percentage range from the corresponding period in the prior year. For fiscal 2018, comparable sales consummated through customer facing digital channels continued the trend of year over year strong growth, while comparable sales consummated in-store declined in the mid-single-digit percentage range from the corresponding period in the prior year.

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

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

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

~~Gross profit for fiscal 2019 was $3.542 billion or 31.7% of net sales, compared with $4.104 billion or 34.1% of net sales for fiscal 2018 and $4.443 billion or 36.0% of net sales for fiscal 2017.~~

~~SG&A for fiscal 2019 were $3.732 billion or 33.4% of net sales, compared with $3.681 billion or 30.6% of net sales for fiscal 2018 and $3.682 billion or 29.8% of net sales for fiscal 2017.~~

Goodwill and other impairments for fiscal 2019 were $509.2 million or 4.6% of net sales compared with $509.9 million or 4.2% of net sales for fiscal 2018. There were no goodwill and other impairments in fiscal 2017.

~~Interest expense, net was $64.8 million, $69.5 million, and $65.7 million in fiscal 2019, 2018 and 2017, respectively.~~

~~The effective tax rate was 19.7%, 12.4%, and 38.9% for fiscal years 2019, 2018 and 2017, respectively.~~

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 2019, 2018 and 2017, the effective tax rate included net expense of approximately $4.3 million, net benefits of approximately $12.1 million and net expense of approximately $7.1 million, respectively, due to the recognition of discrete federal and state tax items. In addition, the fiscal 2017 effective tax rate included the impacts of the comprehensive tax legislation, commonly referred to as the Tax Cuts and Jobs Act (the "Tax Act"), enacted by the U.S. government on December 22, 2017.

The Company’s effective tax rate for fiscal 2017 included a net increase of approximately 1.5%, resulting from the impacts of the Tax Act. The Tax Act significantly revised the U.S. tax code by, among other things, (i) reducing the federal corporate income tax rate from 35% to 21%, effective January 1, 2018, (ii) imposing a one-time transition tax on earnings of foreign subsidiaries deemed to be repatriated and (iii) implementing a modified territorial tax system. The net unfavorable tax impact included the following: (1) re-measurement of the Company’s net deferred tax assets that existed on December 22, 2017; (2) deferred taxes that were created after December 22, 2017 that were deducted at the federal statutory rate of 32.66%, but will reverse at the newly enacted 21% federal statutory rate; (3) the transition tax on accumulated foreign earnings; and (4) the decrease in the federal statutory tax rate in fiscal 2017. Additionally in fiscal 2017, the effective tax rate included the effect of the adoption of Accounting Standards Update 2016-09, ~~Compensation – Stock Compensation (Topic 718): Improvements to Share-Based Payment Accounting, (“ASU 2016-09,~~ ~~Stock Compensation”), which increased the effective tax rate by approximately 1.4%. The effective rate also included approximately 1.9% of favorable tax benefits occurring during fiscal 2017.~~Contents

For the fiscal year ended February 29, 2020 (fifty-two weeks), 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 the fiscal year ended March 2, 2019 (fifty-two weeks), 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, and for the fiscal year ended March 3, 2018 (fifty-three weeks), net earnings per diluted share was $3.04 ($424.9 million).

For the fiscal year ended February 29, 2020 and March 2, 2019, the decrease in net earnings per diluted share is a result of the decrease in net earnings due to the items described above, partially offset by the impact of the Company's repurchase of its common stock.

Capital expenditures for fiscal 2019, 2018, and 2017 were $277.4 million, $325.4 million and $375.8 million, respectively. Almost half of the current year capital expenditures were for technology projects, primarily focused on logistics, digital capabilities and analytics. The remaining capital expenditures were primarily related to new store openings and investments in existing stores.

The Company continues to review and prioritize its capital needs and remains committed to making the required investments in its infrastructure to help position the Company for continued growth and success. Key areas of investment include: continuing to improve the presentation and content as well as the functionality, general search and navigation across its customer facing digital channels; improving customer data integration and customer relations management capabilities; continuing to enhance service offerings to its customers; continuing to strengthen and deepen its information technology, analytics, marketing and e-commerce groups; and creating more flexible fulfillment options designed to improve the Company’s delivery capabilities and lower the Company’s shipping costs. These and other investments are expected to, among other things, provide a seamless and compelling customer experience across the Company’s omnichannel retail platform. As a result of the COVID-19 pandemic, the Company is prioritizing approximately $250 million in essential capital expenditures for fiscal 2020 to drive strategic growth plans, including investments in digital and Buy Online Pick Up In Store (“BOPIS”), and has postponed approximately $150 million in planned capital expenditures, including some store remodels.

During fiscal 2019, the Company opened a total of 9 new stores and closed 42 stores. The Company plans to continue to actively manage its real estate portfolio in order to permit store sizes, layouts, locations and offerings to evolve over time to optimize market profitability and will renovate or reposition stores within markets when appropriate. Over the past several years, the Company’s pace of its store openings has slowed, and the Company has increased the number of store closings. The Company has more than 250 store leases that are up for renewal in 2020, which provide opportunity to evaluate additional store closures and relocations.

During fiscal 2016, the Company’s Board of Directors authorized a quarterly dividend program. During fiscal 2019, 2018 and 2017, total cash dividends of $85.5 million, $86.3 million and $80.9 million were paid, respectively. The Company has suspended its quarterly cash dividend payments as a result of the COVID-19 pandemic. Any future quarterly cash dividend payments on its common

stock in the future will be subject to the determination by the Board of Directors, based on an evaluation of the Company’s earnings, financial condition and requirements, business conditions and other factors.

During fiscal 2019, 2018 and 2017, the Company repurchased 6.8 million, 9.1 million, and 8.0 million shares, respectively, of its common stock at a total cost of approximately $99.7 million, $148.1 million and $252.4 million, respectively. Decisions regarding share repurchases are within the discretion of the Board of Directors, and will be influenced by a number of factors, including the price of the Company’s common stock, general business and economic conditions, the Company’s financial condition and operating results, the emergence of alternative investment or acquisition opportunities, changes in business strategy and other factors. The Company’s 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 the Company’s stock price. The Company reviews its alternatives with respect to its capital structure on an ongoing basis. The Company has postponed its plans for share repurchases as a result of the COVID-19 pandemic.

RESULTS OF OPERATIONS

~~As indicated above, the Company began temporary store closures during the first quarter~~The fiscal years discussed below were each comprised of fiscal 2020, and the majority of its stores are now closed. To the extent store closures persist for an extended period of time, the Company would expect its results of operations to be impacted in future periods.52 weeks. The following table sets forth for the periods indicated (i) selected statement of operations data ~~of the Company~~ 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 sales	100.0	%	100.0	%	100.0	%	(17.3)	%	(7.2)	%

Cost of sales	66.2		68.3		65.9		(19.7)		(3.9)

Gross profit	33.8		31.7		34.1		(12.0)		(13.7)

Selling, general and administrative expenses	34.9		33.4		30.6		(13.6)		1.4

Goodwill and other impairments	1.4		4.6		4.2		(75.0)		(0.1)

Restructuring and transformation initiative costs	1.1		—		—		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, net	0.8		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

Fiscal Year Ended

Percentage
of Net Sales

Percentage Change
from Prior Year
February 29,
2020 March 2,
2019 March 3,
2018 February 29,
2020 March 2,
2019
Net sales 100.0 % 100.0 % 100.0 % (7.2 )% (2.6 )%

Cost of sales 68.3
65.9
64.0
(3.9 ) 0.2

Gross profit 31.7
34.1
36.0
(13.7 ) (7.6 )

Selling, general and administrative expenses 33.4
30.6
29.8
1.4
—

Goodwill and other impairments 4.6
4.2
—
(0.1 ) 100.0

Operating (loss) profit (6.3 ) (0.7 ) 6.2
703.4
(111.4 )

Interest expense, net 0.6
0.6
0.5
(6.7 ) 5.8

(Loss) earnings before provision for income taxes (6.9 ) (1.3 ) 5.6
388.4
(122.5 )

(Benefit) provision for income taxes (1.4 ) (0.2 ) 2.2
679.1
(107.2 )

Net (loss) earnings (5.5 ) (1.1 ) 3.4
347.3
(132.3 )
(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

~~Since fiscal 2017 was a fifty-three week year, fiscal 2018 started one calendar week later than fiscal 2017. The comparable sales calendar compares the same calendar weeks.~~

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, ~~(fifty-two weeks)~~which decreased $870.2 million ~~to $11.159 billion, representing a decrease of~~or 7.2% ~~compared to~~from $12.029 billion of net sales in fiscal ~~2018 (fifty-two weeks),~~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 ~~decreased $320.5 million or 2.6% over the $12.349 billion~~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 ~~2017 (fifty-three weeks).~~ 2020 also reflected the impacts of the business divestitures and store closures described above. For fiscal 2019, ~~and 2018,~~ the decrease in net sales was primarily attributable to a decrease in comparable sales. ~~In addition, for~~

During fiscal ~~2018,~~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 ~~decrease was also attributable to one less week~~corresponding period in the prior year. Net sales ~~compared to fiscal 2017.~~

~~The decrease in comparable~~consummated through digital channels represented approximately 38% of our net sales for fiscal ~~2019 was~~2020, approximately ~~6.8% as compared with a decrease~~17% of ~~approximately 1.1% for fiscal 2018. Comparable sales percentages are calculated based on an equivalent number of weeks in each annual period. The decrease in comparable~~our net sales for fiscal 2019, and ~~2018 was~~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 ~~decrease in~~meaningful metric for the ~~number~~first quarter of ~~transactions in stores, partially offset by an increase in the average transaction amount.~~fiscal 2020 and, therefore, are not a meaningful metric for fiscal 2020. Comparable sales decreased approximately 6.8% for fiscal 2019.

~~The Company’s~~

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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. ~~Customers today may take advantage of the Company’s~~Our omnichannel environment ~~by using~~allows our customers to use more than one channel when making a purchase. ~~The Company believes~~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 ~~the Company’s~~our websites; or a customer may research a particular item, and read other customer reviews on ~~the Company’s~~our websites before visiting a store to consummate the actual purchase; or a customer may ~~reserve~~buy an item online for in-store ~~pick up;~~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, ~~the Company accepts~~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 ~~the Company’s~~our retail operations are integrated and itwe cannot reasonably track the channel in which the ultimate sale is initiated, ~~the Company~~we can however, provide directional information on where the sale was consummated.

For fiscal 2019, comparable sales consummated through customer facing digital channels increased in the low-single-digit percentage range, while comparable sales consummated in-store declined in the high-single-digit percentage range from the corresponding period in the prior year. For fiscal 2018, comparable sales consummated through customer facing digital channels continued the trend of year over year strong growth, while comparable sales consummated in-store declined in the mid-single-digit percentage range from the corresponding period in the prior year.

Comparable sales represented $10.789 billion, $11.604 billion, and $11.813 billion of net sales for fiscal 2019, 2018 and 2017, respectively. Comparable sales dollars are calculated based on an equivalent number of weeks in each annual period.

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 ~~35.2%~~34.7%, 35.2% and 35.4%, ~~and 35.5%~~ of net sales in fiscal 2020, 2019, ~~2018,~~ and ~~2017,~~2018, respectively, of which ~~the Company estimates~~we estimate that bed linens accounted for approximately 11% of net sales in each of fiscal 2020, 2019 ~~2018,~~ and ~~2017, respectively.~~2018. The remaining net sales in fiscal 2020, 2019 and 2018 ~~and 2017~~ of 65.3%, 64.8%, ~~64.6%,~~ and ~~64.5%~~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, ~~2018,~~ and ~~2017.~~2018.

Gross Profit

Gross profit in fiscal 2020, 2019 and 2018 ~~and 2017~~ 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 ~~$4.443 billion or 36.0%~~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 ~~respectively.~~ 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 athe above-mentioned charge ~~for incremental markdowns~~ of approximately $169.8 million for incremental markdowns related to ~~the Company's~~our transformation initiatives. This incremental charge for markdowns was the result of ~~the Company's~~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. This reduction is being~~2020, driven by ~~the Company’s~~our inventory rationalization efforts, including reductions of aged and duplicative SKUs within ~~the Company’s~~our assortment. ~~By taking this~~This action ~~the Company is seeking~~was taken to reset ~~its~~our inventory levels in both stores and distribution centers, as well as refresh ~~its~~our assortment, providing for newness and higher-margin products, all in an effort to drive customer traffic and support top-line performance.

The decrease in the gross profit margin as a percentage of net sales between fiscal 2018 and 2017 was primarily attributed to, in order of magnitude: an increase in coupon expense, resulting from an increase in the average coupon amount partially offset by a decrease in the number of redemptions; a decrease in merchandise margin; and an increase in net direct to customer shipping expense.

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, and $3.682 billion or 29.8%~~2018. The increase in SG&A as a percentage of net sales was primarily attributable to increases in ~~fiscal 2017.~~ 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. ~~The percentage~~

Table of ~~net sales increase in SG&A between fiscal 2018~~Contents

Goodwill and ~~2017 was primarily attributable to an increase in technology expenses, including related depreciation.~~Other Impairments

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 ~~were~~ ~~$391.1~~of $391.1 million,, tradename impairments ~~were~~of $41.8 million, long-lived assets impairments ~~were~~of $75.1 million and other impairments ~~were~~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 ~~the Company's~~our market capitalization. ~~There~~

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 ~~no goodwill~~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 ~~other impairments in fiscal 2017.~~fair value less costs to sell.

Operating ~~(Loss) Profit~~Loss

Operating loss for fiscal ~~2019~~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 ~~for~~in fiscal ~~2018, and~~2018. The favorable change in operating ~~profit was $761.3 million or 6.2%~~loss as a percentage of net sales between fiscal 2020 and fiscal 2019 was primarily due to an increase in ~~fiscal 2017.~~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 ~~changes~~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) profit~~loss as a percentage of net sales between fiscal 2019 and 2018 ~~and between fiscal 2018 and 2017 were~~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 ~~$69.5 million,~~ and ~~$65.7~~$69.5 million in fiscal 2020, 2019 ~~2018~~ and ~~2017,~~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 ~~2018~~ and ~~2017,~~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 ~~and a net benefit of $13.3 million for fiscal 2017,~~ related to changes in ~~the Company’s~~our nonqualified deferred compensation plan ~~(“NQDC”~~("NQDC") ~~investments. These changes were~~investments, which was fully offset by the corresponding ~~changes~~change in the NQDC liability recorded in SG&A, ~~and resulted in~~with no net impact to the consolidated statement of earnings. On December 27, 2017, ~~the Company~~we terminated ~~its~~our nonqualified deferred compensation ~~plan. During~~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,~~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 ~~38.9%~~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 ~~2017.~~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 ~~2018~~ and ~~2017,~~2018, the effective tax rate included net benefit of approximately $2.1 million, net expense of approximately $4.3 million and net ~~benefits~~benefit of approximately $12.1 ~~million and net expense of approximately $7.1~~ million, respectively, due to the recognition of discrete federal and state tax items. ~~In addition, the fiscal 2017 effective tax rate included the impacts of the Tax Act, enacted by the U.S. government on December 22, 2017.~~

The Company’s effective tax rate for fiscal 2017 included a net increase of approximately 1.5%, resulting from the impacts of the Tax Act. The Tax Act significantly revised the U.S. tax code by, among other things, (i) reducing the federal corporate income tax rate from 35% to 21%, effective January 1, 2018, (ii) imposing a one-time transition tax on earnings of foreign subsidiaries deemed to be repatriated and (iii) implementing a modified territorial tax system. The net unfavorable tax impact included the following: (1) re-measurement of the Company’s net deferred tax assets that existed on December 22, 2017; (2) deferred taxes that were created after December 22, 2017 that were deducted at the federal statutory rate of 32.66%, but will reverse at the newly enacted 21% federal statutory rate; (3) the transition tax on accumulated foreign earnings; and (4) the decrease in the federal statutory tax rate in fiscal 2017. The fiscal 2017 effective tax rate also included the effect of the adoption of ASU 2016-09, ~~Stock Compensation~~, which increased the effective tax rate by approximately 1.4%. The adoption of the standard did not affect the Company’s cash outflows for income taxes. Additionally, the fiscal 2017 effective rate included approximately 1.9% of net benefits primarily due to the recognition of favorable discrete federal and state tax items.

As described above, on March 27, 2020, the CARES Act was enacted. The Company is currently implementing applicable benefits of the CARES Act, such as utilizing the ability to carry back and deduct losses to offset prior income in previously filed tax returns. Due to the timing of the enactment of the CARES Act, the Company is still evaluating the impact that the CARES Act may have on the Company’s effective tax rate.

Potential volatility in the effective tax rate from year to year may occur as ~~the Company is~~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

~~The Company has~~We have been able to finance ~~its~~our operations, including ~~its~~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 ~~Company~~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 ~~2019~~2020 in a strong cash ~~position.~~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 ~~29, 2020, the Company~~27, 2021, we had approximately ~~$1.406~~$1.373 billion in cash and investment securities, ~~an increase~~a decrease of approximately ~~$392~~$33.9 million compared with ~~$1.015~~$1.406 billion as of ~~March 2, 2019. For fiscal 2020, the Company believes~~February 29, 2020. We believe that itwe can continue to finance ~~its~~our operations through existing and internally generated ~~funds. As~~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~~COVID-19 pandemic, for fiscal 2020, ~~the Company has taken~~we have and continue to take measures to preserve ~~its~~our liquidity, including ~~the postponement of its share repurchase program and~~ the suspension of the payment of ~~future dividends and prior plans for debt reduction; postponing approximately $150 million in~~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 ~~are~~were temporarily closed. Similar to other ~~retailers, the Company has also~~retailers, we withheld portions of and/or delayed payments to certain of ~~its~~our business partners as ~~the Company seeks~~we seek to renegotiate payment terms, in order to further maintain liquidity given the temporary store closures. ~~There~~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 ~~the Company~~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. ~~In addition, following~~ We are also executing on our business transformation program, which is designed to improve our profitability and includes the ~~end~~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 ~~2019,~~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 ~~Company elected~~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 ~~draw down the remaining $236 million~~customer shipments, was approximately $1.7 billion at February 27, 2021, a decrease of ~~available funds under its $250 million revolving credit facility. The Company continues~~approximately 18.0% compared to explore other sources of liquidity as its capital structure provides further flexibility, including the potential to utilize significant balance sheet assets to generate incremental liquidity, if needed. As ofretail inventory at February 29, 2020, which is primarily related to the ~~Company had approximately $2 billion~~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 ~~non-seasonal inventory on its balance sheet, which had not been pledged as collateral under existing debt arrangements. Capital expenditures~~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 ~~are modeled~~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 ~~be $250~~net debt repayments of $221.4 million, ~~related to essential capital expenditures to drive strategic growth plans, including investments in digital and BOPIS. In addition,~~primarily associated with the ~~Company reviews its alternatives with respect to its capital structure on an ongoing basis. As indicated above,~~repurchase of a portion of the ~~Company began store closures~~outstanding senior notes during the ~~first~~second quarter of fiscal 2020, an increase of $232.8 million in treasury stock repurchases, and ~~the majority~~an increase of ~~its stores are now closed. To the extent store closures persist for an extended period~~$47.6 million related to prepayment under share repurchase agreement, partially offset by lower dividend payments of ~~time, the Company's liquidity would be negatively impacted.~~$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, ~~the Company~~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 ~~the Company’s~~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. The Company continues to~~2019, as we continued our focus on ~~its~~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.

~~Fiscal 2018 compared to Fiscal~~ ~~2017~~

Net cash provided by operating activities in fiscal 2018 was $918.3 million, compared with $859.7 million in fiscal 2017. Year over year, the Company experienced an increase in cash provided by the net components of working capital (primarily prepaid expenses and other current assets, largely due to the prepayment in the prior fiscal year of certain operating expenses associated with tax planning strategies, partially offset by accounts payable) and a decrease in net earnings, as adjusted for non-cash expenses (primarily goodwill and other impairments and deferred income taxes).

Retail inventory, which includes inventory in the Company’s distribution facilities for direct to customer shipments, was approximately $2.6 billion at March 2, 2019, a decrease of approximately 4.7% compared to retail inventory at March 3, 2018. The Company continues to focus on its inventory optimization strategies.

Net cash used in investing activities in fiscal 2018 was $509.7 million, compared with $674.4 million in fiscal 2017. 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. In fiscal 2017, net cash used in investing activities was primarily due to $375.8 million of capital expenditures and $292.5 million of purchases of investment securities.

Net cash used in financing activities for fiscal 2018 was $238.6 million, compared with $323.4 million in fiscal 2017. The decrease in net cash used in financing activities was primarily due to a decrease in common stock repurchases of $104.4 million partially offset by a decrease in proceeds from the exercise of stock options.

Other Fiscal ~~2019~~2020 Information

As of February 29, 2020, the Company maintained two uncommitted lines of credit of $100 million each, with expiration dates of August 30, 2020 and February 21, 2021, respectively. These uncommitted lines of credit are currently and in the future, expected to be used for letters of credit in the ordinary course of business. During fiscal 2019, the Company did not have any direct borrowings under the uncommitted lines of credit. Given the current economic environment, there can be no assurance of the Company’s ability to secure additional funding under its uncommitted lines of credit or on its ability to renew either or both of the uncommitted lines of credit before their respective expiration dates.

On November 14, 2017, the Company replaced its existing $250 million five year senior unsecured revolving credit facility agreement with various lenders with a new $250 million five year senior unsecured revolving credit facility agreement ("Revolver") with various lenders maturing November 14, 2022. The new Revolver has essentially the same terms and requirements as the prior revolving credit facility agreement. For fiscal 2019 and 2018, the Company did not have any borrowings under the Revolver. The Company was in compliance with all covenants related to the Revolver as of February 29, 2020. As noted above, following the end of fiscal 2019, the Company elected to draw down the remaining $236 million of available funds under the Revolver. Given the current economic environment, the pendency of the COVID-19 pandemic, and the temporary closure of a substantial majority of the Company’s stores, the Company may be unable to maintain compliance with the maximum leverage ratio covenant contained in the Revolver in future periods, which would result in an event of default under the Revolver 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.

Between December 2004 and ~~September 2015, the Company’s~~December 2020, our Board of Directors authorized, through several share repurchase programs, the repurchase of ~~$11.950~~$12.775 billion of ~~its~~our common stock. Since 2004 through the end of fiscal ~~2019, the Company has~~2020, we have repurchased approximately ~~$10.7~~$11.0 billion of ~~its~~our common stock through share repurchase programs. ~~The Company has~~We have approximately ~~$1.2~~$1.7 billion remaining of authorized share repurchases as of February ~~29, 2020. The Company has authorization~~27, 2021. Subsequent to ~~make repurchases from time to time in~~ the ~~open market or through other parameters approved by the~~end of fiscal 2020, our Board of Directors ~~pursuant~~expanded the existing share repurchase authorization by an additional $175 million, which increased the total share repurchase authorization to ~~existing rules and regulations. The Company’s~~$12.950 billion. Our share repurchase program could change, and ~~would~~any future share repurchases will be ~~influenced by several~~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 ~~business and market conditions, such as~~ the ~~impact of the COVID-19 pandemic~~restrictions on ~~the Company's stock price. As of the date of this filing, the Company has postponed its plans for~~ share repurchases under the Credit Agreement (see "Long Term Debt" Note 7 to ~~help preserve liquidity as a result of~~ the ~~COVID-19 pandemic.~~accompanying consolidated financial statements)

During fiscal 2016, ~~the Company’s~~our Board of Directors authorized a quarterly dividend program. During fiscal 2020, 2019 ~~2018~~ and ~~2017,~~2018, total cash dividends of $23.1 million, $85.5 million ~~$86.3 million~~ and ~~$80.9~~$86.3 million were paid, respectively. AsIn March 2020, we suspended our future quarterly declarations of cash dividends as a result of the COVID-19 ~~pandemic, the Company has suspended its~~pandemic. Any future quarterly cash dividend ~~payments. Any quarterly cash dividends to~~payments on our common stock will be ~~paid in the future are~~ subject to the determination by the Board of Directors, based on an evaluation of ~~the Company’s~~our earnings, financial condition and requirements, business conditions and other ~~factors.~~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).

~~The Company has~~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, ~~long-term sale/leaseback and finance lease obligations~~ and other long-term liabilities which ~~the Company is~~we are obligated to pay as of February ~~29, 2020~~27, 2021 as follows:


(in thousands)	Total		Less than 1 year		1-3 years		4-5 years		After 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

(in thousands) Total Less than 1 year 1-3 years 4-5 years
After 5
years
Senior unsecured notes ⁽¹⁾
$ 1,495,377
$ —
$ —
$ —
$ 1,495,377
Interest on senior unsecured notes ⁽¹⁾
1,402,518
72,304
144,608
139,071
1,046,535
Operating lease obligations ⁽²⁾
2,875,024
590,582
939,479
591,657
753,306
Purchase obligations ⁽³⁾
1,004,824
1,004,824
—
—
—
Long-term sale/leaseback and finance lease obligations⁽⁴⁾
301,419
10,470
20,841
21,226
248,882
Other long-term liabilities ⁽⁵⁾
149,459
—
—
—
—

Total Contractual Obligations $ 7,228,621
$ 1,678,180
$ 1,104,928
$ 751,954
$ 3,544,100

(1) On July 17, 2014, ~~the Company~~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 ~~2018, the Company~~2020, we purchased and retired ~~$4.6~~approximately $75.0 million of the 4.915% senior unsecured notes due ~~August 1, 2024.~~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 ~~$22.2~~$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 ~~29, 2020, the Company has~~27, 2021, we have entered leases which have not yet commenced for 14two new or relocated locations planned for opening in fiscal ~~2020,~~2021, for which aggregate minimum rental payments over the term of the leases are approximately ~~$40.2~~$7.7 million. Such amounts are included in the table above, but have not been recorded in the consolidated balance sheet as of February ~~29, 2020. In addition, the amounts included in the table above exclude the operating lease payments for PMall and OKL, as the businesses were classified as held for sale as of February 29, 2020.~~27, 2021.

(3) Purchase obligations primarily consist of purchase orders for merchandise.

(4) ~~Long-term sale/leaseback and finance lease obligations represent future minimum lease payments under the sale/leaseback and finance lease agreements.~~

~~(5)~~ 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~~Other Liabilities and ~~income taxes payable~~Income Taxes Payable in the consolidated balance sheet as of February ~~29, 2020.~~27, 2021. The amounts associated with these other long-term liabilities have been reflected only in the ~~Total Column~~total column in the table above as the timing and / or amount of any cash payment is uncertain.

SEASONALITY

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

INFLATION

~~The Company does~~We do not believe that ~~its~~our operating results have been materially affected by inflation during the past year. There can be no assurance, however, that ~~the Company’s~~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 ~~the Company~~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. ~~The Company bases its~~We base our estimates on historical experience and on other assumptions that ~~it believes~~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 ~~includes:~~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 ~~the Company’s~~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.

~~The Company estimates its~~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 ~~the Company’s~~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, ~~the Company’s~~our shrinkage has not been volatile.

~~The Company accrues~~We accrue for merchandise in transit once ~~it takes~~we take legal ownership and title to the merchandise; as such, an estimate for merchandise in transit is included in ~~the Company’s~~our merchandise inventories.

Impairment of Long-Lived Assets: ~~The Company reviews~~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, ~~the Company~~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, ~~the Company~~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. ~~There were no impairments to long-lived assets in fiscal 2017.~~ Of the stores impaired during fiscal ~~2019,~~2020, partial impairments were recorded at 96136 stores, of which 41 were subsequently divested during 2020, resulting in a remaining net book value of long-lived assets at risk of ~~$116.6~~$89.7 million as of February 27, 2021, inclusive of leasehold improvements and right-of-use assets. ~~The Company~~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. The Company~~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, ~~the Company~~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: ~~The Company reviews~~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 ~~the Company believes~~we believe that the assumptions and estimates made are reasonable and appropriate, different assumptions and estimates could materially impact ~~its~~our reported financial results. In addition, sustained declines in ~~the Company's~~our stock price and related market capitalization could impact key assumptions in the overall estimated fair values of ~~its~~our reporting units and could result in non-cash impairment charges that could be material to ~~the Company's~~our consolidated balance sheet or result of operations. Prior to fiscal 2018, ~~the Company has~~we had not recorded an impairment to ~~its~~our goodwill and other indefinite lived intangible assets.

In fiscal 2018, ~~the Company~~we recognized non-cash pre-tax goodwill impairment charges of ~~$285.1~~$285.1 million and ~~$40.1~~$40.1 million for the North American Retail and Institutional Sales reporting units, respectively. As of June 1, 2019, ~~the Company~~we completed a quantitative impairment analysis of goodwill related to ~~its~~our reporting units by comparing the fair value of a reporting unit with its carrying amount. ~~The Company~~We performed a discounted cash flow analysis and market multiple analysis for each reporting unit. Based upon the

analysis performed, ~~the Company~~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 ~~the Company's~~our market capitalization.

Other indefinite lived intangible assets were recorded as a result of acquisitions and primarily consist of tradenames. ~~The Company values its~~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 ~~the~~ fiscal ~~years ended February 29,~~ 2020, 2019 and ~~March 2. 2019,~~2018, for certain other indefinite lived intangible assets, ~~the Company~~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 ~~intangibles~~intangible assets, ~~the Company~~we assessed qualitative factors as of February ~~29, 2020~~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 ~~29, 2020, the Company has $91.2~~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, ~~the Company~~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, ~~the Company~~we will adjust the carrying value of these assets in the period in which the impairment occurs.

Self-Insurance: ~~The Company utilizes~~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 ~~its~~our employees). Liabilities associated with the risks that ~~the Company retains~~we retain are not discounted and are estimated by considering historical claims experience, demographic factors, severity factors and other actuarial assumptions. Although ~~the Company’s~~our claims experience has not displayed substantial volatility in the past, actual experience could materially vary from ~~its~~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 ~~the Company concludes~~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: ~~The Company accounts~~We account for ~~its~~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, ~~the Company intends~~we intend to continue to reinvest the unremitted earnings of ~~its~~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.

~~The Company recognizes~~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.

~~The Company~~We also ~~accrues~~accrue for certain other taxes as required by ~~its~~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, ~~the Company’s~~our various tax returns are subject to audit by various tax authorities. Although ~~the Company believes~~we believe that ~~its~~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 ~~21E~~21 E of the Securities Exchange Act of 1934 including, but not limited to, ~~the Company’s~~our progress and anticipated progress towards ~~its~~our long-term objectives, as well as more generally the status of our future liquidity and ~~the Company’s plans in response to COVID-19.~~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. The Company's~~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 ~~the Company's~~our businesses on demand and operations, as well as on the operations of ~~the Company's~~our suppliers and other business partners, and the effectiveness of ~~the Company's~~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 ~~the Company;~~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;~~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, ~~such as~~ 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 ~~the Company’s~~our plans for new stores; the ability to establish and profitably maintain the appropriate mix of digital and physical presence in the markets ~~it serves;~~we serve; the ability to assess and implement technologies in support of ~~the Company’s~~our development of ~~its~~our omnichannel capabilities; the ability to effectively and timely adjust ~~the Company's~~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 ~~the Company’s~~our common stock and its effect, and the effect of other factors, including the COVID-19 pandemic, on ~~the Company’s~~our capital allocation strategy; risks associated with the ability to achieve a successful outcome for ~~its~~our business concepts and to otherwise achieve ~~its~~our business strategies; the impact of intangible asset and other impairments; disruptions to ~~the Company’s~~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 ~~the Company’s~~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,~~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. ~~The Company does~~Except as required by law, we do not undertake any obligation to update ~~its~~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 ~~29, 2020, the Company’s~~27, 2021, our investments include cash and cash equivalents of approximately ~~$1.000~~$1.353 billion, ~~short-term investment securities of $385.6 million~~ and long term investments in auction rate securities of approximately ~~$20.3~~$19.4 million, at weighted average interest rates of ~~1.10%, 1.52%~~0.01% and ~~1.81%~~0.09%, respectively. The book value of these investments is representative of their fair values.

~~The Company’s~~Our senior unsecured notes have fixed interest rates and are not subject to interest rate risk. As of February ~~29, 2020,~~27, 2021, the fair value of the senior unsecured notes was ~~$1.126~~$1.118 billion, which is based on quoted prices in active markets for identical instruments compared to the carrying value of approximately ~~$1.495~~$1.195 billion.

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ITEM 8 – FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The following are included herein:


1)		Consolidated Balance Sheets as of February 27, 2021 and February 29, 2020

1)2)		Consolidated ~~Balance Sheets as~~Statements of Operations for the fiscal years ended February 27, 2021, February 29, 2020, and March 2, 2019

2)3)		~~Consolidated Statements of Operations for the fiscal years ended~~ ~~February 29, 2020, March 2, 2019, and March 3, 2018~~

3)	Consolidated Statements of Comprehensive (Loss) Income for the fiscal years ended February 27, 2021, February 29, 2020, and March 2, 2019 ~~and March 3, 2018~~

4)		Consolidated Statements of Shareholders’ Equity for the fiscal years ended February 27, 2021, February 29, 2020, and March 2, 2019 ~~and March 3, 2018~~

5)		Consolidated Statements of Cash Flows for the fiscal years ended February 27, 2021, February 29, 2020, and March 2, 2019 ~~and March 3, 2018~~

6)		Notes to Consolidated Financial Statements

7)		Reports of Independent Registered Public Accounting Firm

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BED BATH & BEYOND INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands, except per share data)


	February 29, 2020			March 2, 2019				February 27, 2021		February 29, 2020
Assets							Assets
Current assets:							Current assets:
Cash and cash equivalents	$	1,000,340		$	508,971		Cash and cash equivalents	$	1,352,984	$	1,000,340
Short term investment securities	385,642			485,799			Short term investment securities	0		385,642
Merchandise inventories	2,093,869			2,618,922			Merchandise inventories	1,671,909		2,093,869
Prepaid expenses and other current assets	248,342			296,280			Prepaid expenses and other current assets	595,152		248,342
Assets held-for-sale	98,092			—			Assets held-for-sale	0		98,092

Total current assets	3,826,285			3,909,972			Total current assets	3,620,045		3,826,285

Long term investment securities	20,380			20,010			Long term investment securities	19,545		20,380
Property and equipment, net	1,430,604			1,853,091			Property and equipment, net	918,418		1,430,604
Operating lease assets	2,006,966			—			Operating lease assets	1,587,101		2,006,966
Goodwill	—			391,052

Other assets	506,280			396,416			Other assets	311,821		506,280

Total assets	$	7,790,515		$	6,570,541		Total assets	$	6,456,930	$	7,790,515

Liabilities and Shareholders' Equity							Liabilities and Shareholders' Equity
Current liabilities:							Current liabilities:
Accounts payable	$	944,194		$	1,094,078		Accounts payable	$	986,045	$	944,194
Accrued expenses and other current liabilities	675,776			623,734			Accrued expenses and other current liabilities	636,329		675,776
Merchandise credit and gift card liabilities	340,407			339,322			Merchandise credit and gift card liabilities	312,486		340,407
Current operating lease liabilities	463,005			—			Current operating lease liabilities	360,061		463,005
Liabilities related to assets held-for-sale	43,144			—			Liabilities related to assets held-for-sale	0		43,144
Current income taxes payable	—			20,498

Total current liabilities	2,466,526			2,077,632			Total current liabilities	2,294,921		2,466,526

Other liabilities	204,926			395,409			Other liabilities	82,279		204,926
Operating lease liabilities	1,818,783			—			Operating lease liabilities	1,509,767		1,818,783
Income taxes payable	46,945			49,235			Income taxes payable	102,664		46,945
Long term debt	1,488,400			1,487,934			Long term debt	1,190,363		1,488,400

Total liabilities	6,025,580			4,010,210			Total liabilities	5,179,994		6,025,580

Shareholders' equity:							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 343,683 and 342,582, respectively; outstanding 126,528 and 132,233 shares, respectively	3,436			3,426
Preferred stock - $0.01 par value; authorized - 1,000 shares; 0 shares issued or outstanding							Preferred stock - $0.01 par value; authorized - 1,000 shares; 0 shares issued or outstanding	0		0
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							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 capital	2,167,337			2,118,673			Additional paid-in capital	2,152,135		2,167,337
Retained earnings	10,374,826			11,112,887			Retained earnings	10,225,253		10,374,826
Treasury stock, at cost	(10,715,755		)	(10,616,045		)
Treasury stock, at cost; 233,620 and 217,155 shares, respectively							Treasury stock, at cost; 233,620 and 217,155 shares, respectively	(11,048,284)		(10,715,755)
Accumulated other comprehensive loss	(64,909		)	(58,610		)	Accumulated other comprehensive loss	(55,600)		(64,909)

Total shareholders' equity	1,764,935			2,560,331			Total shareholders' equity	1,276,936		1,764,935

Total liabilities and shareholders' equity	$	7,790,515		$	6,570,541		Total liabilities and shareholders' equity	$	6,456,930	$	7,790,515



New York						11-2250488
(State or other jurisdiction of						(IRS Employer
incorporation or organization)						Identification No.)



Title of each class	Trading Symbol (s)	Name of each exchange on which registered
Common stock, $.01 par value	BBBY	The Nasdaq Stock Market LLC
		(Nasdaq Global Select Market)


Form 10-K
Item No.			Name of Item			Page

~~Form 10-K~~			PART I
Item ~~No.~~				~~Name of Item~~

	1.	Business			~~PART I~~4
Item 1.1A.			Risk Factors			~~Business~~10
Item ~~1A.~~1B.			Unresolved Staff Comments			~~Risk Factors~~16
Item ~~1B.~~2.			Properties			~~Unresolved Staff Comments~~16
Item 2.3.			Legal Proceedings			~~Properties~~17
Item 3.4.			Mine Safety Disclosures			~~Legal Proceedings~~18
~~Item 4.~~						~~Mine Safety Disclosures~~

		PART II
Item 5.						Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities	19
Item 6.						Selected Financial Data
Item 7.						Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 7A.						Quantitative and Qualitative Disclosures About Market Risk	36
Item 8.						Financial Statements and Supplementary Data	37
Item 9.						Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	70
Item 9A.						Controls and Procedures	70
Item 9B.			Other Information			~~Other Information~~70

				PART III
Item 10.						Directors, Executive Officers and Corporate Governance	71
Item 11.			Executive Compensation			~~Executive Compensation~~71
Item 12.						Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	71
Item 13.						Certain Relationships and Related Transactions, and Director Independence	72
Item 14.						Principal Accounting Fees and Services	72

				PART IV
Item 15.						Exhibits, Financial Statement Schedules	73
Item 16.						Form 10-K Summary	77


STORE LOCATIONS

Alabama	15	New York	72
Alaska	1	North Carolina	26
Arizona	24	North Dakota	2
Arkansas	7	Ohio	26
California	97	Oklahoma	9
Colorado	20	Oregon	11
Connecticut	14	Pennsylvania	27
Delaware	4	Rhode Island	2
Florida	72	South Carolina	15
Georgia	27	South Dakota	2
Hawaii	1	Tennessee	19
Idaho	8	Texas	78
Illinois	32	Utah	7
Indiana	14	Vermont	2
Iowa	8	Virginia	28
Kansas	10	Washington	23
Kentucky	8	West Virginia	2
Louisiana	12	Wisconsin	10
Maine	4	Wyoming	2
Maryland	14	District of Columbia	1
Massachusetts	23	Puerto Rico	2
Michigan	32	Alberta, Canada	15
Minnesota	11	British Columbia, Canada	11
Mississippi	7	Manitoba, Canada	2
Missouri	16	New Brunswick, Canada	2
Montana	6	Newfoundland and Labrador, Canada	1
Nebraska	6	Nova Scotia, Canada	2
Nevada	10	Ontario, Canada	28
New Hampshire	10	Prince Edward Island, Canada	1
New Jersey	72	Saskatchewan, Canada	2
New Mexico	5	Total	1,020



STORE LOCATIONS

Alabama	23	New York	98
Alaska	1	North Carolina	44
Arizona	38	North Dakota	3
Arkansas	8	Ohio	45
California	174	Oklahoma	11
Colorado	34	Oregon	17
Connecticut	25	Pennsylvania	39
Delaware	6	Rhode Island	5
Florida	96	South Carolina	23
Georgia	39	South Dakota	3
Hawaii	1	Tennessee	26
Idaho	9	Texas	115
Illinois	47	Utah	14
Indiana	22	Vermont	3
Iowa	9	Virginia	47
Kansas	12	Washington	36
Kentucky	12	West Virginia	3
Louisiana	20	Wisconsin	14
Maine	8	Wyoming	2
Maryland	22	District of Columbia	3
Massachusetts	44	Puerto Rico	3
Michigan	42	Alberta, Canada	15
Minnesota	14	British Columbia, Canada	11
Mississippi	7	Manitoba, Canada	2
Missouri	22	New Brunswick, Canada	2
Montana	9	Newfoundland and Labrador, Canada	1
Nebraska	8	Nova Scotia, Canada	2
Nevada	15	Ontario, Canada	27
New Hampshire	15	Prince Edward Island, Canada	1
New Jersey	92	Saskatchewan, Canada	2
New Mexico	9	Total	1,500



☒			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


*	For purposes of this calculation, all outstanding shares of common stock have been considered held by non-affiliates other than the 832,991 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.


Period	Total 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, 2020	3,600	$	18.91	3,600	$	1,814,413,505
December 27, 2020 - January 23, 2021	5,001,700	$	20.49	5,001,700	$	1,711,930,557

January 24, 2021 - February 27, 2021	6,346,000	$	20.94	6,346,000	$	1,729,038,784
Total	11,351,300	$	20.74	11,351,300	$	1,729,038,784



Consolidated Selected Financial Data	Fiscal Year Ended (1)
(in thousands, except per share and selected operating data)	February 29, 2020			March 2, 2019			March 3, 2018 (2)			February 25, 2017 (3)			February 27, 2016

Statement of Operations Data:

Net sales	$	11,158,580		$	12,028,797		$	12,349,301		$	12,215,757		$	12,103,887

Gross profit	3,541,660			4,103,980			4,443,015			4,576,350			4,620,310

Operating (loss) profit (8)	(700,064		)	(87,135		)	761,321			1,135,210			1,414,903

Net (loss) earnings	(613,816		)	(137,224		)	424,858			685,108			841,489

Net (loss) earnings per share - Diluted	$	(4.94	)	$	(1.02	)	$	3.04		$	4.58		$	5.10

Dividends declared per share (6)	$	0.68		$	0.64		$	0.60		$	0.50		$	—

Selected Operating Data:

Number of stores open (at period end)	1,500			1,533			1,552			1,546			1,530

Total square feet
of store space (at period end)	42,262,500			43,132,000			43,681,000			43,619,000			43,274,000

Percentage (decrease) increase in comparable sales (4)	(6.8		%)	(1.1		%)	(1.3		%)	(0.6		)%	1.0		%

Comparable sales (in 000's) (4)	$	10,788,631		$	11,604,110		$	11,813,092		$	11,701,042		$	11,722,973

Balance Sheet Data (at period end):

Working capital	$	1,359,759		$	1,832,340		$	1,805,393		$	1,559,400		$	1,757,282

Total assets (9)	7,790,515			6,570,541			7,040,806			6,822,655			6,487,677

Long-term operating lease liabilities (9)	1,818,783			—			—			—			—

Long-term sale/leaseback and capital lease
obligations	102,412			103,983			105,614			107,136			109,274

Long-term debt (5)	1,488,400			1,487,934			1,492,078			1,491,603			1,491,137

Shareholders' equity (6) (7)	$	1,764,935		$	2,560,331		$	2,888,628		$	2,719,277		$	2,559,540


	Twelve Months Ended									Twelve Months Ended
	February 29, 2020			March 2, 2019			March 3, 2018			February 27, 2021		February 29, 2020		March 2, 2019
Net sales	$	11,158,580		$	12,028,797		$	12,349,301	Net sales	$	9,233,028	$	11,158,580	$	12,028,797

Cost of sales	7,616,920			7,924,817			7,906,286		Cost of sales	6,114,947		7,616,920		7,924,817

Gross profit	3,541,660			4,103,980			4,443,015		Gross profit	3,118,081		3,541,660		4,103,980

Selling, general and administrative expenses	3,732,498			3,681,210			3,681,694		Selling, general and administrative expenses	3,224,363		3,732,498		3,681,210

Goodwill and other impairments	509,226			509,905			—		Goodwill and other impairments	127,341		509,226		509,905

Operating (loss) profit	(700,064		)	(87,135		)	761,321
Restructuring and transformation initiative expenses									Restructuring and transformation initiative expenses	102,202		0		0

Loss on sale of businesses, including impairment of assets held for sale									Loss on sale of businesses, including impairment of assets held for sale	1,062		0		0

Operating loss									Operating loss	(336,887)		(700,064)		(87,135)

Interest expense, net	64,789			69,474			65,661		Interest expense, net	76,913		64,789		69,474

(Loss) earnings before provision for income taxes	(764,853		)	(156,609		)	695,660
Gain on extinguishment of debt									Gain on extinguishment of debt	(77,038)		0		—

(Benefit) provision for income taxes	(151,037		)	(19,385		)	270,802
Loss before benefit from income taxes									Loss before benefit from income taxes	(336,762)		(764,853)		(156,609)

Net (loss) earnings	$	(613,816	)	$	(137,224	)	$	424,858
Benefit from income taxes									Benefit from income taxes	(185,989)		(151,037)		(19,385)

Net (loss) earnings per share - Basic	$	(4.94	)	$	(1.02	)	$	3.05
Net (loss) earnings per share - Diluted	$	(4.94	)	$	(1.02	)	$	3.04
Net loss									Net loss	$	(150,773)	$	(613,816)	$	(137,224)

Net loss per share - Basic									Net loss per share - Basic	$	(1.24)	$	(4.94)	$	(1.02)
Net loss per share - Diluted									Net loss per share - Diluted	$	(1.24)	$	(4.94)	$	(1.02)

Weighted average shares outstanding - Basic	124,352			134,292			139,238		Weighted average shares outstanding - Basic	121,446		124,352		134,292
Weighted average shares outstanding - Diluted	124,352			134,292			139,739		Weighted average shares outstanding - Diluted	121,446		124,352		134,292

Dividends declared per share	$	0.68		$	0.64		$	0.60	Dividends declared per share	$	0	$	0.68	$	0.64


																						Common Stock			Additional Paid- in Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Loss		Total
	Common Stock			Additional Paid- in Capital			Retained Earnings			Treasury Stock					Accumulated Other Comprehensive Loss			Total				Shares	Amount						Shares	Amount
	Shares	Amount								Shares		Amount
Balance at February 25, 2017	339,533	$	3,395	$	1,974,781		$	11,003,890		(193,259	)	$	(10,215,539	)	$	(47,250	)	$	2,719,277

Net earnings							424,858											424,858

Other comprehensive loss, net of tax							614								(1,046		)	(432		)

Dividend declared							(85,859		)									(85,859		)

Shares sold under employee stock option plans, net of taxes	359	4		10,157														10,161

Issuance of restricted shares, net	1,575	16		(16		)												—

Payment and vesting of performance stock units	321	3		(3		)												—

Stock-based compensation expense, net				72,904														72,904

Director fees paid in stock	7			152														152

Repurchase of common stock, including fees										(8,038	)	(252,433		)				(252,433		)
Balance at March 3, 2018	341,795	3,418		2,057,975			11,343,503			(201,297	)	(10,467,972		)	(48,296		)	2,888,628			Balance at March 3, 2018	341,795	$	3,418	$	2,057,975	$	11,343,503	(201,297)	$	(10,467,972)	$	(48,296)	$	2,888,628

Net loss							(137,224		)									(137,224		)	Net loss						(137,224)							(137,224)

Other comprehensive loss, net of tax															(10,314		)	(10,314		)	Other comprehensive loss, net of tax											(10,314)		(10,314)

Effect of Adoption of ASU 2014-09							(4,221		)									(4,221		)	Effect of Adoption of ASU 2014-09						(4,221)							(4,221)

Dividend declared							(89,171		)									(89,171		)	Dividend declared						(89,171)							(89,171)

Shares sold under employee stock option plans, net of taxes																		—


Issuance of restricted shares, net	320	3		(3		)												—			Issuance of restricted shares, net	320	3		(3)									0

Payment and vesting of performance stock units	464	5		(5		)												—			Payment and vesting of performance stock units	464	5		(5)									0

Stock-based compensation expense, net				60,657														60,657			Stock-based compensation expense, net				60,657									60,657

Director fees paid in stock	3			49														49			Director fees paid in stock	3			49									49

Repurchase of common stock, including fees										(9,052	)	(148,073		)				(148,073		)	Repurchase of common stock, including fees								(9,052)	(148,073)				(148,073)
Balance at March 2, 2019	342,582	3,426		2,118,673			11,112,887			(210,349	)	(10,616,045		)	(58,610		)	2,560,331			Balance at March 2, 2019	342,582	3,426		2,118,673		11,112,887		(210,349)	(10,616,045)		(58,610)		2,560,331

Net loss							(613,816		)									(613,816		)	Net loss						(613,816)							(613,816)

Other comprehensive loss, net of tax															(6,299		)	(6,299		)	Other comprehensive loss, net of tax											(6,299)		(6,299)

Effect of Adoption of ASU 2016-02							(40,700		)									(40,700		)	Effect of Adoption of ASU 2016-02						(40,700)							(40,700)

Dividend declared							(83,545		)									(83,545		)	Dividend declared						(83,545)							(83,545)

Shares sold under employee stock option plans, net of taxes	139	1		2,345														2,346			Shares sold under employee stock option plans, net of taxes	139	1		2,345									2,346

Issuance of restricted shares, net	370	4		(4		)												—			Issuance of restricted shares, net	370	4		(4)									0

Payment and vesting of performance stock units	580	5		(5		)												—			Payment and vesting of performance stock units	580	5		(5)									0

Stock-based compensation expense, net				46,159														46,159			Stock-based compensation expense, net				46,159									46,159

Director fees paid in stock	12	—		169														169			Director fees paid in stock	12			169									169

Repurchase of common stock, including fees										(6,806	)	(99,710		)				(99,710		)	Repurchase of common stock, including fees								(6,806)	(99,710)				(99,710)
Balance at February 29, 2020	343,683	$	3,436	$	2,167,337		$	10,374,826		(217,155	)	$	(10,715,755	)	$	(64,909	)	$	1,764,935		Balance at February 29, 2020	343,683	3,436		2,167,337		10,374,826		(217,155)	(10,715,755)		(64,909)		1,764,935

Net loss																					Net loss						(150,773)							(150,773)

Other comprehensive loss, net of tax																					Other comprehensive loss, net of tax											9,309		9,309

Dividend forfeited																					Dividend forfeited						1,200							1,200

Forfeiture of restricted shares, net																					Forfeiture of restricted shares, net	(786)	(8)		8									0

Payment and vesting of performance stock units																					Payment and vesting of performance stock units	344	4		(4)									0

Stock-based compensation expense, net																					Stock-based compensation expense, net				32,344									32,344

Accelerated share repurchase program																					Accelerated share repurchase program				(47,550)				(15,833)	(327,450)				(375,000)

Repurchase of common stock, including fees																					Repurchase of common stock, including fees								(632)	(5,079)				(5,079)
Balance at February 27, 2021																					Balance at February 27, 2021	343,241	3,432		2,152,135		10,225,253		(233,620)	(11,048,284)		(55,600)		1,276,936


1.	~~SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RELATED MATTERS~~


T.	~~Store Opening, Expansion, Relocation and Closing Costs~~



(in millions)	February 29, 2020		March 2, 2019
Available-for-sale securities:
Long term	$	20.3	$	19.9

Held-to-maturity securities:
Short term	385.6		485.8
Total investment securities	$	405.9	$	505.7


A.	~~Nature of Operations~~


B.	~~Fiscal Year~~


C.	~~Principles of Consolidation~~


D.	~~Use of Estimates~~



(in thousands)	Statement of Operations Location	Fiscal year ended February 29, 2020
Operating lease cost	Cost of sales and SG&A	$	581,061
Finance lease cost:
Depreciation of property	SG&A	2,591
Interest on lease liabilities	Interest expense, net	8,927
Variable lease cost	Cost of sales and SG&A	203,526
Sublease income	SG&A	(1,112		)
Total lease cost		$	794,993


(in thousands)	Statement of Operations Location	Fiscal year ended February 27, 2021		Fiscal Year Ended February 29, 2020
Operating lease cost	Cost of sales and SG&A	$	582,168	$	581,061
Finance lease cost:
Depreciation of property	SG&A	2,500		2,591
Interest on lease liabilities	Interest expense, net	7,755		8,927
Variable lease cost	Cost of sales and SG&A	189,485		203,526
Sublease income	SG&A	(12,574)		(1,112)
Total lease cost		$	769,334	$	794,993


(in thousands)	Consolidated Balance Sheet Location	February 27, 2021		February 29, 2020
Assets
Operating leases	Operating lease assets	$	1,587,101	$	2,006,966
Finance leases	Property and equipment, net	0		69,287
Total Lease assets		$	1,587,101	$	2,076,253

Liabilities
Current:
Operating leases	Current operating lease liabilities	$	360,061	$	463,005
Finance leases	Accrued expenses and other current liabilities	0		1,541
Noncurrent:
Operating leases	Operating lease liabilities	1,509,767		1,818,783
Finance leases	Other liabilities	0		102,412
Total lease liabilities		$	1,869,828	$	2,385,741


(in thousands)	Operating Leases
Fiscal Year:
2021	$	462,703
2022	409,076
2023	338,706
2024	282,472
2025	219,807
Thereafter	617,804
Total lease payments	$	2,330,568
Less imputed interest	$	(460,740)
Present value of lease liabilities	$	1,869,828


	February 27, 2021		February 29, 2020
Weighted-average remaining lease term (in years)
Operating leases	6.8		6.6
Finance leases	—		25.7
Weighted-average discount rate
Operating leases	6.4	%	6.2	%
Finance leases	0	%	9.0	%



	~~February 29, 2020~~
~~Weighted-average remaining lease term (in years)~~
~~Operating leases~~	~~6.6~~
~~Finance leases~~	~~25.7~~
~~Weighted-average discount rate~~
~~Operating leases~~	~~6.2~~	%
~~Finance leases~~	~~9.0~~	%



(in thousands)	Fiscal year ended February 29, 2020
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	580,030
Operating cash flows from finance leases	10,401
Operating lease assets obtained in exchange for new operating lease liabilities	548,856



	FISCAL YEAR ENDED
Black-Scholes Valuation Assumptions (1)	February 29, 2020		March 2, 2019		March 3, 2018
Weighted Average Expected Life (in years) (2)	7.6		6.7		6.7
Weighted Average Expected Volatility (3)	39.41	%	34.96	%	26.49	%
Weighted Average Risk Free Interest Rates (4)	2.39	%	2.92	%	2.17	%
Expected Dividend Yield (5)	4.34	%	3.80	%	1.60	%



(Shares in thousands)	Number of Stock Options		Weighted Average Exercise Price
Options outstanding, beginning of period	4,395		$	47.53
Granted	144		15.68
Exercised	(139	)	16.85
Forfeited or expired	(3,577	)	49.13
Options outstanding, end of period	823		40.19
Options exercisable, end of period	823		$	40.19


(Shares in thousands)	Number of Restricted Shares	Weighted Average Grant-Date Fair Value
Unvested restricted stock awards, beginning of period	2,445	$	35.50
Granted	95	8.09
Vested	(706)	37.49
Forfeited	(899)	32.25
Unvested restricted stock awards, end of period	935	$	34.34


(Shares in thousands)	Number of Restricted Stock Units	Weighted Average Grant-Date Fair Value
Unvested restricted stock units, beginning of period	0	$	0
Granted	2,316	14.23
Vested	(19)	23.58
Forfeited	(27)	23.58
Unvested restricted stock units, end of period	2,270	$	14.04


	Fiscal Year Ended
Monte Carlo Simulation Assumptions	February 27, 2021
Risk Free Interest Rate	0.25	%
Expected Dividend Yield	0	%
Expected Volatility	51.47	%
Expected Term	3 years


(Shares in thousands)	Number of Performance Stock Units	Weighted Average Grant-Date Fair Value
Unvested performance stock units, beginning of period	1,414	$	21.57
Granted	653	12.28
Vested	(343)	37.50
Forfeited	(249)	17.96
Unvested performance stock units, end of period	1,475	$	14.36


(Shares in thousands)	Number of Restricted Stock Units	Weighted Average Grant-Date Fair Value
Unvested restricted stock units, beginning of period	579	$	13.65
Granted	816	6.33
Vested	(446)	13.65
Forfeited	0	0
Unvested restricted stock units, end of period	949	$	7.36


◦	~~39,105 RSUs, which will vest on November 4, 2020, subject, in general, to the new President~~table above, and ~~CEO remaining in the Company's service through the vesting date;~~


◦	539,648 RSUs, which will vest on the following schedule (i) 273,734 RSUs will vest on March 31, 2020, (ii) 132,957 RSUs will vest on September 30, 2020, and (iii) 132,957 RSUs will vest on March 31, 2021, and in each case subject, in general, to the new President and CEO remaining in the Company's service through the vesting date,



	FISCAL 2019 QUARTER ENDED												FISCAL 2018 QUARTER ENDED
(in thousands, except per share data)	June 1, 2019			August 31, 2019			November 30, 2019			February 29, 2020			June 2, 2018		September 1, 2018		December 1, 2018		March 2, 2019
Net sales	$	2,572,989		$	2,719,447		$	2,759,322		$	3,106,822		$	2,753,667	$	2,935,018	$	3,032,231	$	3,307,881
Gross profit	887,179			726,988			913,837			1,013,656			964,848		988,561		1,003,710		1,146,861
Operating profit (loss)	(406,842		)	(182,258		)	(29,758		)	(81,206		)	81,229		78,858		49,513		(296,735		)
Earnings (loss) before provision for income taxes	(422,740		)	(198,600		)	(46,937		)	(96,576		)	64,497		64,247		26,822		(312,175		)
Provision (benefit) for income taxes	(51,655		)	(59,835		)	(8,385		)	(31,162		)	20,921		15,608		2,468		(58,382		)
Net earnings (loss)	$	(371,085	)	$	(138,765	)	$	(38,552	)	$	(65,414	)	$	43,576	$	48,639	$	24,354	$	(253,793	)
EPS-Basic (1)	$	(2.91	)	$	(1.12	)	$	(0.31	)	$	0.53		$	0.32	$	0.36	$	0.18	$	(1.92	)
EPS-Diluted (1)	$	(2.91	)	$	(1.12	)	$	(0.31	)	$	0.53		$	0.32	$	0.36	$	0.18	$	(1.92	)
Dividends declared per share	$	0.170		$	0.170		$	0.170		$	0.170		$	0.160	$	0.160	$	0.160	$	0.160


~~(c)~~	Information with respect to compliance with Section 16(a) of the Securities Exchange Act of 1934 is set forth under the section captioned “Delinquent Section 16(a) Reports” in the Proxy Statement and is incorporated herein by reference, to the extent responsive disclosure is required.


~~(d)~~	Information on our audit committee and the audit committee financial expert is set forth under the section captioned “Audit Committee” in the Proxy Statement and is incorporated herein by reference.


Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)		Weighted-average exercise price of outstanding options, warrants and rights (b)			Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by shareholders (1)	4,482,327	(2)	$	—	(3)	14,462,015	(4)
Equity compensation plans not approved by shareholders	1,222,850	(5)	—		(3)	20	(6)
Total	5,705,177	(2)	$	—	(3)	14,462,035