Bed, Bath & Beyond Beats Analyst Estimates

Although times will get tougher, Bed, Bath & Beyond marches on, establishing its first store in Hawaii in the second quarter and increasing its earnings estimate for the year. In the second quarter, net earnings reached $181.8 million versus $135.5 million in the same period last year. Net sales increased by 11.6% to $2.14 billion while comparable store sales gained 7.4%.
Bed, Bath & Beyond’s earnings beat a Thompson Reuters average analyst estimate of 63 cents per diluted share. The retailer raised its net earnings per diluted share sales estimate for full-year fiscal 2010 to approximately 20% above last year’s from the 15% announced previously.
But Bed, Bath & Beyond isn’t immune to consequences arising from the soft economy. For one thing, the company had to plan for “the continuation of the shift and mix of merchandise sold to lower-margin categories,” Gene Castagna, Bed, Bath & Beyond’s CFO, said in a conference call.
Also, in the second half of the year, comparable store sales comparisons grow more difficult. The retailer suffered negative comps in last year’s first half and a strong turnaround later. So second half same-store sales came in at 9.5%
“Taking this more difficult second half comparison into consideration, for the third and fourth quarters of fiscal 2010, we are modeling a low single-digit percentage increase in comparable store sales. This would result in a mid single-digit percentage comp store sales increase for all of fiscal 2010,” Castagna said.
Yet tight cost management and an assortment that continues to attract additional consumer spending, even if in smaller increments, caused the company to boost its full year profit guidance, and it now calls for third quarter earnings per share in the 61 to 65 cent range. Analyst average estimate for the period is 64 cents.
With the debut of its first store in Hawaii, Bed, Bath & Beyond has opened 15 new stores in the current fiscal year along the way to about 45 across its various banners including Christmas Tree Shops, Harmon and buybuyBaby. Peter Wahlstrom, a Morningstar analyst, applauded Bed, Bath & Beyond’s “conservative approach toward leverage and expansion” in an analysis and noted that the company continued to make the best of lean times. “Second-quarter results from Bed Bath & Beyond came in above the high end of management’s internal expectations yet again, and the firm continues to perform relatively well in a tough, albeit slowly recovering, macro environment,” he stated. “We plan to increase our full-year revenue assumption to reflect management’s updated outlook and the firm’s continued momentum at retail.”