Wednesday, December 22, 2010

Bed Bath & Beyond, Inc. (NASDAQ: BBBY): Q3 Earnings Preview

Bed Bath & Beyond, Inc. (NASDAQ: BBBY) is scheduled to release its third-quarter earnings after the closing bell on Wednesday, December 22, 2010. Analysts, on average, expect the company to report earnings of 65 cents per share on revenue of $2.11 billion. In the year ago period, the company reported earnings of 58 cents per share on revenue of $1.98 billion.

Bed Bath & Beyond Inc., together with its subsidiaries, operates a chain of retail stores. As of August 28, 2010, the Company had a total of 1,111 stores, including 972 Bed Bath & Beyond stores in 50 states, the District of Columbia, Puerto Rico and Canada, 61 Christmas Tree Shops stores, 33 buybuy BABY stores and 45 stores under the names of Harmon or Harmon Face Values. During the fiscal second quarter, the Company opened five Bed Bath & Beyond stores, including the first store in its 50th state, Hawaii, and two buybuy BABY stores. Consolidated store space as of August 28, 2010 was approximately 34.1 million square feet.  In addition, the Company is a partner in a joint venture, which operates two stores in the Mexico City market under the name Home & More.

In the preceding fiscal second-quarter, the New Jersey-based company's net income was $181.6 million, or 70 cents a share, compared to $135.5 million, or 52 cents a share, in the prior-year quarter. Revenue grew to $2.14 billion from $1.91 billion in the same quarter last year. Analysts, on average, expected the company to report earnings of 63 cents per share on revenue of $2.10 billion. 

At its last earnings call in September, the company raised its fiscal 2010 earnings guidance. The company said that it now expects net earnings per share to increase by about 20%, which implies earnings of $2.76 per share. Previously, the company anticipated earnings to grow by about 15%. The company expects the total number of new stores openings across all of its concepts to be in the mid-to-high 40s range in fiscal 2010. Further, it expects to continue its program of expanding, renovating, remodeling and/or relocating a number of its stores in fiscal 2010.

The company anticipates fiscal third quarter net income to be in the range of approximately 61 cents to 65 cents per share.

Bed Bath represents a strong brand with solid growth opportunities. A brisk expansion strategy, debt-free balance sheet and strong cash position augur well for the company’s future operating performance. However, intense competition from department stores, specialty stores and mass merchandisers will likely  to continue hurt BBBY’s growth.

In terms of stock performance, BBBY shares have gained nearly 24% since the beginning of the year. 

Full Disclosure: None.
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