Bed, Bath & Beyond Executes Growth Strategy Despite Recession
Bed, Bath & Beyond Executes Growth Strategy Despite Recession
Bed, Bath & Beyond's strong financial position puts it in a particularly strong position to explore the opportunities an economic recovery might offer.
That strength has allowed it to do something in the downturn that many other retailers have had to forget about, and that's grow. And not just a store here and there. The company has been able to execute on its long-term strategy of growing its core namesake stores and adding new locations under its Harmon health and beauty care banner, buybuy Baby children's specialty operations and Christmas Tree Shops, a seasonal specialist that also sells home furnishings at a somewhat lower price/quality position than Bed, Bath & Beyond stores.
In the recently completed second quarter, noted Wedbush Morgan analyst Joan Storms, Bed, Bath & Beyond posted earnings per share of 52 cents compared to 46 in last year's quarter beating guidance of about 42 cents, consensus estimate of 48 cents and her reckoning of 50 cents. Comparable store sales did slip 0.6 percent, but that was inline with guidance and better than the consensus estimate of negative 1.2 percent, Storms pointed out. Total sales were up just over three percent to $1.92 billion, beating both her and the First Call estimate of just under three percent. Gross margin improved 50 basis points to about 40 percent due to lower product costs, partially offset by higher markdowns and coupon redemptions.
Consumers might be more eager to cash in those coupons, Bed, Bath & Beyond's primary marketing vehicle, in the recession, but they are also a reason to consider the company's prospects may be better than most. In a post recessionary period with consumers not quite as bargain sensitive, the company shouldn't have to distribute as many of those coupons with primary competitor Linens 'N Things ?€" another retailer fond of mailing those little $5 off certificates ?€" out of business.
The comparable store
Bed, Bath & Beyond's strong financial position puts it in a particularly strong position to explore the opportunities an economic recovery might offer.
That strength has allowed it to do something in the downturn that many other retailers have had to forget about, and that's grow. And not just a store here and there. The company has been able to execute on its long-term strategy of growing its core namesake stores and adding new locations under its Harmon health and beauty care banner, buybuy Baby children's specialty operations and Christmas Tree Shops, a seasonal specialist that also sells home furnishings at a somewhat lower price/quality position than Bed, Bath & Beyond stores.
In the recently completed second quarter, noted Wedbush Morgan analyst Joan Storms, Bed, Bath & Beyond posted earnings per share of 52 cents compared to 46 in last year's quarter beating guidance of about 42 cents, consensus estimate of 48 cents and her reckoning of 50 cents. Comparable store sales did slip 0.6 percent, but that was inline with guidance and better than the consensus estimate of negative 1.2 percent, Storms pointed out. Total sales were up just over three percent to $1.92 billion, beating both her and the First Call estimate of just under three percent. Gross margin improved 50 basis points to about 40 percent due to lower product costs, partially offset by higher markdowns and coupon redemptions.
Consumers might be more eager to cash in those coupons, Bed, Bath & Beyond's primary marketing vehicle, in the recession, but they are also a reason to consider the company's prospects may be better than most. In a post recessionary period with consumers not quite as bargain sensitive, the company shouldn't have to distribute as many of those coupons with primary competitor Linens 'N Things ?€" another retailer fond of mailing those little $5 off certificates ?€" out of business.
The comparable store