Earnings & Beyond for Bed Bath & Beyond
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Things are looking good for Bed Bath & Beyond (NASDAQ: BBBY), as the retail giant came out with its fiscal 2012 first quarter earnings on 20th, June. However, this did not stop the share prices from falling when the company’s outlook fell short from what the street was expecting. Let’s take a look at this retailer’s latest quarter and all that is going on.
A look at the numbers
The quarter proved to be a sound one for Bed Bath & Beyond as the top line surged 5.1% to $2.22 billion as compared to the year ago quarter. The same store sales also increased 3% year on year, but this growth was lower than the 7% growth that was witnessed in fiscal 2011 first quarter. The bottom line also displayed a good 15% surge, while the EPS per diluted share increased by 24% to $0.89 as against $0.72 in 2011 first quarter.
The secret of the consistent success of the company lies in its efforts to constantly evolve its range of merchandise offerings and its emphasis on customer satisfaction. The quarter saw opening of 2 Bed Bath & Beyond stores as well as 4 buybuy Baby stores and 1 Christmas Tree Shops store. By the end of the quarter, the company had a total of 1,180 stores running across 50 states of the U.S. Apart from these, the company is also involved in a partnership in a joint venture to operate 2 stores in the Mexico City under the name of Home & More. The period also looked for the shareholders as BBBY gave back $306 million to its shareholders by the way of buy-back of shares.
Despite the good performance, the share prices of the company plunged 10% as the management announced that it expects its second quarter EPS to be somewhere between $0.97 and $1.03. The Wall Street reacted immediately to the news of weaker second quarter outlook which was lower than the $1.08 figure that the analysts at FactSet Research and Thomson Reuters were expecting.
A lot more is going on for Bed Bath & Beyond at the moment. Recently, the company announced that it has entered into an agreement to acquire the discount chain Cost Plus Inc. (NASDAQ: CPWM) for $550 million. If the acquisition takes place, this will be the largest acquisition made by the company till date. Cost Plus is a speciality retailer which focuses on a wide range of items such as home furnishing products, gifts, food items and entertaining products.
Apart from the Cost Plus acquisition, the company was also in talks to acquire Linen Holdings, LLC, a distributor of textile products and right after the close off the first quarter, the company announced that it has completed this $105 million all cash acquisition.
The foolish bottomline
Bed Bath & Beyond has been doing well for some time now and we saw the trend being continued in the recent quarter also. The fundamentals of the company are in good shape. Though the management’s expectation of the second quarter EPS is lower than what the street had expected, I feel strongly about the stock. The strong growth plans of the company backed by the deep understanding of its business are surely to aid its growth. Let’s wait and see how things work out for this retails giant.
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