Bed Bath & Beyond Inc.
) reported earnings of $1.68 per share for fourth-quarter fiscal
2012, up 13.5% from the year-ago quarter's earnings of $1.48 as
well as came ahead of the company's guidance range of
$1.60-$1.67. The company's earnings remain in line with the Zacks
Consensus Estimate. Bed Bath & Beyond's earnings per share
include the performances of World Market (Cost Plus Inc.) and
Linen Holdings, which were acquired in June last year.
Quarter in detail
The Zacks Rank #3 (Hold) company's top line jumped almost
24.5% to $3,401.4 million in the fourth quarter from $2,732.3
million in the year-ago quarter. The year-over-year rise in sales
was primarily driven by the acquisitions made last year as well
as an increase in comparable-store sales (comps) and new store
openings. Moreover, Bed Bath & Beyond's top line almost
touched the Zacks Consensus Estimate of $3,402.0 million.
Comps rose 2.5%, primarily driven by an increased average
transaction amount partially offset by the decline in number of
transactions. Comps for the quarter exclude the results from the
acquisitions of World Market and Linen Holdings.
Gross profit came at $1,394.9 million, up 19.9% from the
comparable year-ago level. However, gross profit margin for the
quarter declined 160 basis points (bps) to 41.0% from 42.6% in
fourth-quarter fiscal 2011. Margins suffered a downside mainly
due to increased coupons and their redemption, increased
markdowns and shift in the mix of merchandise sold to lower
Selling, general and administrative (SG&A) expenses surged
30.0% year over year to $796.8 million and as a percentage of
sales it expanded 100 bps to 23.4%. During the quarter, Bed Bath
& Beyond's higher payroll and occupancy expenses as well as
higher advertising expenses led to an increase in SG&A
expenses as a percentage of net sales.
Consequently, operating margin contracted about 260 bps to
17.6% from the prior-year quarter. However, in dollar terms,
operating profit increased 8.6% to $597.8 million.
Fiscal 2012 Results
For fiscal 2102, Bed Bath & Beyond reported earnings of
$4.56 per share, up nearly 12% from $4.06 per share earned in
fiscal 2011, and surpassed the Zacks Consensus Estimate by a
penny. Net sales for the fiscal escalated 14.9% to $10,914.6
million but missed the Zacks Consensus Estimate of $10,918.0
Bed Bath & Beyond ended fiscal 2012 with cash and cash
equivalents of $565.0 million compared with $1,003.2 million in
fiscal 2011. Moreover, shareholder equity at fiscal-end stood at
$4,097.7 million versus $3,922.5 million in the previous
During the quarter, the company repurchased nearly 5.3 million
of its outstanding shares, valued at about $305.0 million.
Therefore, as of fourth-quarter end, the company had nearly $2.4
billion remaining under its share repurchase program of $2.5
billion, authorized in Dec 2012.
In the fourth quarter, Bed Bath & Beyond inaugurated 1 Bed
Bath & Beyond store and 4 buybuy BABY stores. As of Mar 2,
2013, the company operated 1,004 Bed Bath & Beyond stores in
all 50 states, the District of Columbia, Puerto Rico and Canada;
264 World Market, Cost Plus World Market, and World Market
Stores; 74 Christmas Tree Shop or andThat! stores; 82 buybuy BABY
stores and 47 stores under the names Harmon or Harmon Face
Values, thereby bringing the total store count to 1,471.
Bed Bath & Beyond is also a partner in a joint venture,
which operates 2 stores in the Mexico City market under the name
"Home & More."
Stepping into the first quarter of fiscal 2013, Bed Bath has
so far opened 2 Bed Bath & Beyond stores and 1 buybuy BABY
Including the newly acquired businesses, management expects
net sales to increase by 17% to 19% in the first quarter and by
5% to 7% for fiscal 2013. Further, the company projects a
comparable store sales increase of 2% to 4% for both the first
quarter and fiscal 2013.
On the cost side, the company expects depreciation in fiscal
2013 to be nearly $220.0 million. Additionally, the consolidation
of World Market and Linen Holdings' financial results, the
company's major capital initiatives, assumptions of an increase
in coupons and continued mix shift toward low-margin categories
is expected to deleverage operating profit margin for the first
quarter of fiscal 2013.
Bed Bath & Beyond expects to deliver first-quarter fiscal
2013 earnings per share between 88 cents and 94 cents. Moreover,
the company projects fiscal 2013 earnings per share to increase
in the mid-single-digit to low-double-digit percentage range.
Moreover, Bed Bath & Beyond projects a total capital
spending, including that of World Market and Linen Holdings, of
about $350 million in fiscal 2013, mainly slated for new stores
and existing store refurbishments, information technology
enhancements and other important future projects. The company
intends to open 45 new stores across all concepts in fiscal
Other Stocks to Consider
Bed Bath Beyond currently holds a Zacks Rank #3 (Hold). Other
stocks worth considering in the retail industry are
Sears Holdings Corp.
Costco Wholesale Corp.
). Macy's and Sears hold a Zacks Rank #1 (Strong Buy), while
Costco has a Zacks Rank #2 (Buy).
BED BATH&BEYOND (BBBY): Free Stock Analysis
COSTCO WHOLE CP (COST): Free Stock Analysis
MACYS INC (M): Free Stock Analysis Report
SEARS HLDG CP (SHLD): Free Stock Analysis
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