Bed Bath & Beyond Inc.
Q1 2006 Earnings Call Transcript

Published: 22 Jun 2006

[Operator:]

Good afternoon. At this time, I would like to welcome everyone to the Bed Bath & Beyond first quarter of 2006 earnings conference call. (Operator Instructions) Now at this time I would like to turn the conference over to Ron Curwin, Senior Vice President of Investor Relations of Bed Bath & Beyond. Mr. Curwin, please go ahead.

[Ron Curwin:]

Thank you, and good afternoon. Welcome to Bed Bath & Beyond's first quarter of fiscal 2006 conference call. Within the past hour we issued a press release covering Bed Bath & Beyond's results for the three-month period ended May 27, 2006. During this call we will comment on some of the quarter's highlights and update guidance for fiscal 2006, a 53-week year ending on March 3, 2007. Before proceeding I will read the following statement and I quote

[Warren Eisenberg:]

I'm very pleased to be able to say that once again in our first fiscal quarter of 2006 we've achieved record sales and earnings, as we have every single quarter since becoming a public company in 1992. During the quarter, we added ten new Bed Bath & Beyond stores, ending the period with 751 stores in 46 states, the District of Columbia and Puerto Rico. Since the beginning of our fiscal second quarter on May 28, 2006, we've added three additional Bed Bath & Beyond Stores of the approximately twelve planned for the period. For all of fiscal 2006 we expect to open between 75 and 80 new Bed Bath & Beyond Stores. We also expect to open four additional Christmas Tree Shops before year-end, which together with the two new stores already opened, will bring to six Christmas Tree Shops for all of fiscal 2006. Consolidated store space as of May 27, 2006 was approximately 25.8 million square feet. Our new stores as a group continue to perform well and we are confident that they will continue to achieve their operating goals as they grow and mature. Although we will never be satisfied, we are pleased that our stores continue to improve and have never been better than they are today. We're highly confident that our solid growth will continue for years into the future. We believe we can operate approximately 1,300 Bed Bath & Beyond stores in the United States as we continue the expansion and integration of our Christmas Tree Shops and Harmon Store Concepts. We have increased our investment spending to create the infrastructure that will be required to support this expansion. While doing so, we continue to review and consider other productive uses of our growing capital, including acquisitions, international activities and additional share repurchases. Our fiscal first quarter results reinforce our view that 2006 will be still another record year and that all of our performance goals for the year will be achieved. I'll now turn the call over to Steven Temares. Steve.

[Steven Temares:]

Thank you, Warren. Good afternoon, everyone and thank you for participating in this conference call. Within the past hour, we were pleased to have reported a solid fiscal first quarter; the beginning of what we are confident will be our best and most profitable year ever. Our financial results are a continuing testimony to the talents and efforts of our over 34,000 associates and to their core principles of superior customer service and corporate decentralization. To briefly touch on the highlights

[Ron Curwin:]

Thanks Steve. As you heard from Warren and Steve, we are pleased with the results of our fiscal first quarter. As many of you know, the changes in our compensation plans and revised stock option accounting will continue to impact earnings comparisons through the fiscal second quarter ending on August 26, 2006. These substantially non-cash charges are estimated to be approximately $0.03 per share for the fiscal second quarter and approximately $0.06 per share for the fiscal first half of 2006. Reflecting this and other planning assumptions, we continue to target net earnings of approximately $0.51 per share in the fiscal second quarter, consistent with our prior guidance and up about 9% from the year earlier period. Were it not for these accounting changes, earnings per share for the fiscal second quarter might have been expected to increase by approximately 15%. Similarly, for all of fiscal 2006, after updating our major planning assumptions, we continue to expect earnings per share to grow by about 13% from fiscal 2005 to approximately $2.17 per share; again consistent with prior guidance. As mentioned, this would be after absorbing a charge of about $0.06 per share due to the aforementioned accounting changes. Were it not for these changes, earnings on a per share basis might have been expected to increase by approximately 16% for all of fiscal 2006. In sum, we remain comfortable at this time that our quarterly and annual targets for fiscal 2006 will be met. As we said before, the changes to our compensation program are expected to have a favorable long-term impact to that which would have otherwise resulted from the application of the new stock option accounting rules, had we not changed our compensation program. Also as previously pointed out, the changes to our compensation program permit us to continue to reward our people while providing greater predictability and control over a significant element in our business planning. A summary of our major planning assumptions at this time are as follows. Before concluding this afternoon's call a few additional comments relevant to our fiscal first quarter

[Operator:]

Ladies and gentlemen, this concludes today's conference call. Thank you all for listening. You may now disconnect.