Bed Bath & Beyond Scores Profit Gain
September 28, 2009-- Home Textiles Today,
Outpacing many other retailers, Bed Bath & Beyond met and, in some cases, exceeded expectations in its second quarter, growing earnings by 13% despite slow sales growth and nearly flat comps.
"While retailers, like us, continue to be broadly affected by the current economic challenges, our second-quarter operating results — although never completely satisfactory to us — did meet or exceed most of our internal planning assumptions," said Steven Temares, ceo, during the home textiles specialty chain's quarterly earnings call last week. "During the second half of fiscal 2008, we intensified our focus on managing expenses. We believe net sales and comp store sales continue to be negatively affected by the economic slowdown."
For the second quarter ended Aug. 29, BBB's earnings came in at 52 cents per diluted share or $135.5 million, up about 13.0% over last year's 2Q results. Sales rose 3.3% $1.915 billion, while comps fell 0.6%.
Year to date, the company reported earnings per share of 86, up 13.0% compared to the first half of last year. Sales rang in at $3.61 billion, up 3.1%. Comps decreased by about 1.1%.
Real estate remains a focus for BBB, which in the second quarter opened nine new BBB stores, including four additional stores in Canada, one Harmon Face Values store and three buybuyBaby stores, bringing the number of fiscal first-half openings to 21 versus 23 in 2008.
"We continue to add fine china departments in additional Bed Bath stores as well as Harmon Face Values health and beauty care departments in additional Bed Bath, Christmas Tree Shops and buybuyBaby stores," said Warren Eisenberg, co-chairman.
In fiscal 2009, including stores already opened to date, the company anticipates opening approx imately 58 new stores across its multiple concepts, including 35 new BBB stores in the United States and Canada, seven Christmas Tree Shops, 12 buybuyBaby stores and four Harmon Face Value stores.
"This reflects our continued prudent approach to growth in the challenging macro-economic environment," Eisenberg continued. "We believe that in the U.S. and Canada, there is an opportunity to open in excess of 400 additional BBB stores, and we also strive over time to become the leading home furnishings retailer in the other countries in which we do business."
To date, the chain operates 946 BBB in 49 states, Washington D.C., Puerto Rico and Canada as well as 53 Christmas Tree Shops, 22 buybuyBaby and 41 stores under the names Harmon or Harmon Face Values. In addition, the company operates two stores in Mexico City under the name Home & More through a joint venture.
Looking ahead, "we assume that the remainder of the year will remain challenging," said Eugene Castagna, cfo and treasurer. "We will continue to assess our prospects as the year develops, and will reflect changes in our outlook, if any."
BBB expects consolidated comparable store sales to be relatively flat to slightly positive for the third and fourth quarters, and slightly negative to relatively flat for the full year. Total sales are expected to increase by a mid-single digit percentage in the third and fourth quarters, and by a low- to mid-single digit percentage for all of fiscal 2009.
"Our balance sheet remains strong and debt-free," continued Castagna. "We ended the fiscal second quarter with cash and cash-equivalents and investment securities of approximately $1.2 billion."
He added that inventories continue "to be tailored by stores to meet the anticipated demands of our customers and are in good shape." As of quarter end, inventories were approximately $1.8 billion or $53.97 per square foot — a reduction of about 8% on a per-square-foot basis versus last year.
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