BBB widens retail gap with 1Q profit spike
June 25, 2001-- Home Textiles Today,
UNION, NJ — Bed Bath & Beyond beat the malaise that bedeviled so many retail companies during the spring selling season, driving up profits for the first quarter by 28.4 percent.
During a lackluster period that forced many retailers to lower their earnings expectations, Bed Bath & Beyond hit all of its targets, executives said during an investors call following the first quarter announcement.
With net income of $30.0 million for the quarter ended June 2, the company recorded a profit of 10 cents per share, up 25 percent from 8 cents per share in the first quarter of 2000. The earnings-per-share figures were adjusted for a two-for-one stock split in August last year, the company noted.
Although it did not exceed its earnings targets — a feat that analysts have come almost to take for granted — Bed Bath & Beyond nonetheless managed to turn in its 36th consecutive quarter of growth.
The company used the occasion to separate itself from the retail pack, reiterating its growth strategy and long-term prospects for sustained expansion. Ron Curwin, cfo and treasurer, said the company is "comfortable" with consensus call estimates of 18 cents a share for the second quarter (it posted 15 cents a share in the year-ago period) and 72 cents per share for the fiscal year.
"The organization we've built continues to establish and achieve impressive goals," said Warren Eisenburg, co-ceo and co-chairman. "As the retail industry continues to consolidate, we are pleased that, by any measure, the performance gap between ourselves and our direct competitors is widening. We expect these trends to continue."
He added, "Despite our rapid growth, our share of the $75 billion home products market is under 4 percent, leaving us strong opportunities for expansion."
The company remains on track to open 80 stores this year, Curwin said, with 11 stores opened during the first quarter. The company will open another 20 in the current quarter, followed by a whopping 45 new units in the third quarter and four more in the final quarter of the year. New units are currently generating sales per square foot of $150 to $175, he added, a pace that will help the company achieve its target of net sales growth in the low 20s for the fiscal year.
With a debt-free balance sheet, as well as cash and cash equivalents of approximately $276 million vs. $136 million a year ago, "we expect our expansion will continue to be funded with internally generated cash," Curwin added.
The company's average gross margin, at 40.8 percent, was flat compared to the second quarter of 2000, a performance that was on plan, said president and coo Steve Temares.
Bed Bath & Beyond rang up sales of $575.8 million, up 25.4 percent from $459.1 million in the year-ago period, a noteworthy achievement, Temares said, "especially in light of the challenging retail environment, including going-out-of-business sales and the heightened promotional activities in the market."
SG&A costs at 32.9 percent also were flat, a measure which prompted Temares to observe that the company recognizes it has "the widespread opportunity to improve."
Bed Bath & Beyond Inc.
|QTR. 6/2 (x000)||2001||2000||% CHG|
|Oper. income (EBIT)||45,602||36,339||25.5|
|Per share (diluted)||0.10||0.08||25.0|
|Average gross margin||40.8%||40.8%||—|
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