Bed Bath & Beyond barely bullish
April 10, 2008,
Union, N.J. – Coming off a reasonably good fiscal 2007, Bed Bath & Beyond is bracing itself for “continued pressure” on its gross margin in 2008 due to increased prices in raw materials and sourced goods, as well as stepped-up customer coupon redemptions, the company said in remarks to analysts late yesterday.
The home furnishings specialty retailer recorded net earnings of $562.8 million for 2007, off 5.3% from $594.2 million in 2006. EPS of $2.10 in 2007 was one cent better than year-ago EPS.
Sales of $7.05 billion grew 6.5% from $6.62 billion in the prior year.
In the fourth quarter, earnings of $172.9 million were down 16.0% from $205.8 million in the year-ago period, as sales fell 3.1% to $1.93 billion.
Without offering details, BBB indicated it will tweak its mix, as it predicts a persistent trend in consumer merchandise choices toward hard lines and away from “higher margin soft line merchandise,” said Ronald Curwin, svp of investor relations.
The company, which operates 971 units (including 41 Christmas Tree Shops, 40 Harmon doors, and nine buybuyBABY stores) in 49 states, Washington D.C., Puerto Rico and most recently Canada – its first international location – has slightly slowed its Bed Bath & Beyond expansion plans. Where last year the company opened 66 new units, for 2008 the goal is 50 to 55 new stores. Also in the works are remodels and expansions, aimed at “improving productivity,” said Steven Temares, ceo.
Additionally, as many as 24 new units are slated to be opened in BBB’s new Canadian market – at least 12 of them during 2008.
Execs insisted the retailer maintains its long term goal of operating 1,300 stores and continues to explore other international opportunities. Despite the soft economy this year, which BBB expects will accelerate retail consolidation, the chain sees a silver lining for itself in the months ahead: “We believe we will be able to look back at this period as one affording exceptional opportunity to gain market share and improve our competitive position,” Temares said.
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