BBB eyes doubling base
December 22, 2003,
Union, NJ — It's good to be Bed Bath & Beyond. Last week's abundant third quarter report was so cheery the company raised its outlook for the remainder of the fiscal year by two cents per share. And there was more good news: sales per square foot up nearly 7 percent in new stores, the potential to double the chain's size, and talk of international expansion.
"Home goods retailing remains one of the most attractive sectors in all of retailing, and we have the organization and financial strength to take advantage of profitable opportunities as they appear in the future," said Warren Eisenberg, co-founder, during the company's quarterly conference call last week.
The 569-unit Bed Bath & Beyond chain has upped the number of stores it believes the U.S. can support from 950 to 1,050 stores.
Eisenberg added that the company was pleased with the program initiated several years ago to size stores to meet the needs of the markets they serve.
"As a group, the new stores under this program are performing better than plan," Eisenberg said.
On average the new stores are both exceeding sales productivity and earnings targets, and the company anticipates future stores will continue to have excellent results.
"Consistent with recent experience," new stores are expected to garner $160 to $185 per square foot in their first year of operation, which is up from $150 to $175 previously, according to Ron Curwin, cfo. The company plans to add between 80 and 90 units in fiscal 2004, with one third opening in the first half, and the balance in the back half.
The company now controls two other nodes of potential growth. Its share of the $85 billion HBA market remains small, Eisenberg added, providing expansion opportunity.
The company will continue to grow both its Harmon division, now at 30 stores, and Christmas Tree Shops, now at 24 stores. It also plans to add square footage to many Bed Bath & Beyond stores to accommodate merchandise initiatives such as fine china, specialty foods and health and beauty care.