Bed Bath & Beyond Inc.
Q2 2011 Earnings Call Transcript

Published: 21 Sep 2011

[Operator:]

Welcome to Bed Bath & Beyond's Second Quarter of Fiscal 2011 Results Conference Call. [Operator Instructions] This conference is being recorded. A rebroadcast of the conference call will be available beginning on Wednesday, September 21, 2011, at 6

[Eugene A. Castagna:]

Thank you, and good afternoon. Welcome to Bed Bath & Beyond's Second Quarter of Fiscal 2011 Conference Call. Within the past hour, we issued a press release announcing Bed Bath & Beyond's results for the 3- and 6-month periods ended August 27, 2011. During this call, we will comment on some of the second quarter highlights and update our fiscal third quarter and 2011 fiscal year planning assumptions. Before proceeding, I will read the following statement, and I quote, "Bed Bath & Beyond's fiscal second quarter press release and comments made during this call may contain forward-looking statements within the meaning of Section 21E of the Securities & Exchange Act of 1934 as amended. Many of these forward-looking statements can be identified by the use of words such as may, will, expect, anticipate, approximate, estimate, assume, continue, model, project, plan and similar words and phrases. The company’s actual results and future financial condition may differ materially from those expressed in any such forward-looking statements as a result of many factors that may be outside the company’s control. Please refer to Bed, Bath & Beyond’s SEC filings, including its Form 10-K for the year ended February 26, 2011. The company does not undertake any obligation to update its forward-looking statements." Joining me on today's call are Warren Eisenberg, Co-Chairman of Bed Bath & Beyond; and Steven Temares, Chief Executive Officer and Member of the Board of Directors. I'm now very pleased to introduce Warren Eisenberg. Warren?

[Warren Eisenberg:]

Thanks, Gene. Good afternoon. I'm pleased to report that our company's net earnings per diluted share increased approximately 33% in the fiscal second quarter to $0.93. We are pleased that we've been able to continue our strong performance in terms of earnings growth, cash flow generation and overall financial strength as we continue to challenge ourselves to improve in every aspect of our operation. During the second quarter, we opened 3 Bed Bath & Beyond stores, 7 buybuy BABY stores and 4 Christmas Tree Shops, as well as closed 1 Bed & Bath Beyond store. Additionally, we continue to relocate and renovate Bed Bath & Beyond stores. Consolidated store space at August 27, 2011, was approximately 35.6 million square feet, an increase of approximately 4% over last year's second quarter. Since the beginning of the fiscal third quarter of 2011, we've opened 3 additional Bed Bath & Beyond stores and 2 buybuy BABY stores. Including these stores, we currently operate 1,160 stores, including 989 Bed Bath & Beyond stores in all 50 states, the District of Columbia, Puerto Rico and Canada; as well as 70 Christmas Tree Shops; 56 buybuy BABY stores; and 45 stores under the names Harmon or Harmon Face Values. In addition, we are a partner in a joint venture which operates 2 stores in the Mexico City market under the name Home & More. During fiscal 2011, including the 24 stores we've opened to date, we anticipate that the total number of new store openings will now be approximately 40 stores across all our concepts. Currently, we believe that fiscal 2011 store openings by concept will be substantially similar to fiscal 2010, with a slight shift to several more buybuy BABY stores and slightly fewer Bed Bath & Beyond stores. As always, as the year progresses and we gain greater visibility, the total number of stores that we will open may be updated. As always, we apply our stringent standards to growth as we evaluate new store sites, as well as continue to review our existing locations and lease terms for opportunities to relocate and to -- or rightsize our stores in response to the changing market conditions. We continue to believe that throughout the United States and Canada, there is an opportunity to operate in excess of 1,300 Bed Bath & Beyond stores, as well as grow our Christmas Tree Shops and buybuy BABY concepts from coast to coast. Additionally, we will continue to open Harmon Face Values stores and place health and beauty care offerings in stores across all our concepts. We remain committed to, and are excited about, the continued growth of all our merchandise offerings. We remain focused on increasing the productivity of our existing stores by evolving the merchandise offerings, as well as by expanding, renovating and/or relocating stores to enhance our customer’s shopping experience. Our ability to leverage the breadth and depth of our merchandise offerings, grow our bridal, baby and gift registries and continue the development of our interactive platforms, has afforded us additional opportunities to attract new customers. The continued success of our company is due to the tremendous efforts of our associates and to our unique decentralized culture. This culture takes advantage of the knowledge, the independence and the customer focus of our associates; has always been the foundation of our long-term performance; and allows us to respond more quickly to market demands and the changing economic conditions on a market-by-market basis. We continue to believe we have the people, the resources and the capability to achieve our near- and long-term goals. And now, I will turn the call over to Steven Temares. Steve?

[Steven H. Temares:]

Thank you, Warren. Good afternoon, everyone, and thank you for participating in this conference call. We are pleased that our second quarter results exceeded our internal planning assumptions. We believe the dedication and talents of our associates and our constant focus on improving the overall customer shopping experience, while at the same time creating a more productive and efficient company, are the keys to producing the continued strong results we have experienced. As Warren said, we are also pleased that we've been able to continue our strong performance in terms of earnings growth, cash flow generation and overall financial strength. While consumer confidence and spending is impacted by the continuing economic challenges, including relatively high unemployment and commodity prices and a sluggish housing market, our fundamental business strategy remains unchanged

[Eugene A. Castagna:]

Thanks, Steve. Before I begin, I would like to note that we are deeply saddened by the loss of life and property for those who are affected by recent severe weather along the East Coast of the United States. As a result of these events, we experienced a short-term disruption in the operations of a number of our stores during the last few days of our fiscal second quarter and the early part of our fiscal third quarter. However, only 1 Christmas Tree Shop store will be closed for an extended period of time. Our actual results for the second quarter of fiscal 2011 and planning assumptions for the remainder of fiscal 2011 consider the impact of these events on our operations. As you heard from Warren and Steve, our results exceeded our planning assumptions and we earned $0.93 per diluted share in our fiscal second quarter and $1.65 per diluted share for the first 6 months of fiscal 2011. We were encouraged by our positive fiscal second quarter results and continue to be cautiously optimistic about the second half of fiscal 2011. The following are our major planning assumptions for the remainder of fiscal 2011

[Operator:]

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