Bed Bath & Beyond Inc.
Q1 2012 Earnings Call Transcript

Published: 20 Jun 2012

[Operator:]

Welcome to Bed Bath & Beyond's First Quarter of Fiscal 2012 Results Conference Call. [Operator Instructions] This conference is being recorded. A rebroadcast of the conference call will be available beginning on Wednesday, June 20, 2012, at 6

[Eugene A. Castagna:]

Thank you, and good afternoon. Welcome to Bed Bath & Beyond's First Quarter of Fiscal 2012 Conference Call. A short time ago, we issued a press release announcing Bed Bath & Beyond's results for the 3-month period ended May 26, 2012. During this call, we will comment on some of the first quarter highlights and update our second quarter and full fiscal year 2012 planning assumptions. Before proceeding, I will read the following statement and I quote, "Bed Bath & Beyond's fiscal first 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. Please refer to Bed Bath & Beyond's SEC filings, including its Form 10-K for the year ended February 25, 2011. The company does not undertake any obligation to update its forward-looking statements." Joining me on today's call are Leonard Feinstein, 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 Leonard Feinstein. Len?

[Leonard Feinstein:]

Thanks, Gene, and good afternoon. We are pleased to report our company's fiscal first quarter net earnings per diluted share of $0.89, an increase of approximately 24% over last year's fiscal first quarter. We are also pleased that during the quarter, we entered into a definitive agreement to acquire all of the outstanding shares of Cost Plus, Inc., a retailer selling a wide range of home decorated items, furniture, gifts, holiday and other seasonal items and gourmet food and beverages. And subsequent to the end of the first quarter, we completed the acquisition of Linen Holdings, LLC, a business-to-business distributor of a variety of textile products, amenities and other goods. We are extremely excited about the opportunities provided by these acquisitions. In a few minutes, Steven and Gene will also provide some additional information regarding these transactions. Other first quarter activities included the opening of 2 Bed Bath & Beyond stores, 4 buybuy BABY stores and 1 Christmas Tree Shops stores. Additionally, we continue to relocate and renovate Bed Bath & Beyond stores. Consolidated store space at May 26, 2012, was approximately 36.3 million square feet, an increase of approximately 3% over the end of last year's first quarter. Since the beginning of the fiscal second quarter of 2012, we have opened 2 additional Bed Bath & Beyond stores and 3 additional buybuy BABY stores. Including these stores, we currently operate 1,185 stores, consisting of 997 Bed Bath & Beyond stores in all 50 states, the District of Columbia, Puerto Rico and Canada; 72 Christmas Tree Shops stores; 71 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 2012, including the 12 additional stores we have opened to date, we anticipate opening a total of approximately 40 stores across all our concepts, excluding Cost Plus World Market stores, as the transaction has not yet been completed. Currently, we believe that fiscal 2012's mix of store openings by concept will be relatively comparable to that of fiscal 2011. As the year progresses, the total number of stores that we will open will be updated as we gain greater visibility. 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/or rightsize our stores in response to changing market conditions. We believe that throughout the United States and Canada, again, excluding Cost Plus World Market stores as the transaction has not yet been completed, there is an opportunity to operate an 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 selected stores across all of our concepts, as well as World Market food departments in selected Bed Bath & Beyond stores. We remain committed to and are excited about the continued growth of all our merchandise categories. We are 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 shopping experience. Our ability to leverage the breadth and depth of our merchandise offerings, to grow our bridal, baby and gift registries and to continue the development of our interactive platform has afforded us additional opportunities to attract new customers. As we have consistently said, the success of our company is due to the tremendous efforts of our associates and to our unique decentralized culture. This culture, which 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 to changing economic conditions on a market by market basis. We have the people, the resources and the capability to achieve our near- and long-term goals. And now I'll turn the call over to Steven Temares. Steve?

[Steven H. Temares:]

Thank you, Len. Good afternoon, everyone, and thank you for participating in this conference call. We are pleased that we have been able to continue our strong performance in terms of earnings growth, cash flow generation, and overall financial strength. We believe the dedication and talents of our associates and their 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 strong results we have experienced. Despite the ongoing economic challenges that are affecting consumers, our fundamental business strategy remains unchanged

[Eugene A. Castagna:]

Thanks, Steve. As you heard from Len and Steve, we earned $0.89 per diluted share in our fiscal first quarter. While we are encouraged by our positive fiscal first quarter results, we continue to be cautiously optimistic about the remainder of the coming year. The following are the planning assumptions for the remainder of fiscal 2012, which consist of 53 weeks and exclude Cost Plus, Inc. as the transaction has not yet been completed. One, the benefit from the results of operations for Linen Holdings is included in our modeling. However, it did not have a material effect for the fiscal second quarter or for all of fiscal 2012. Two, including the 12 stores opened so far this year, we anticipate opening a total of approximately 40 stores across all of our concepts. Currently, we believe that fiscal 2012's mix of store openings by concept will be relatively comparable to that of fiscal 2011. As the year progresses, the total number of stores that we will open will be updated as we gain greater visibility. As always, we remain flexible to take advantage of real estate opportunities that may arise. Also, we will continue to place Harmon Face Values health and beauty care offerings in selected stores across all of our concepts, as well as add World Market food departments in selected Bed Bath & Beyond stores. Three, we expect to continue our program of relocating, renovating and expanding a number of our stores in fiscal 2012. Four, capital expenditures for fiscal 2012 are planned to be in the range of $275 million to $325 million, which, of course, remain subject to the timing and composition of the projects, including new stores and existing store refurbishments, information technology enhancements and other projects important to our future, including the following major initiatives

[Operator:]

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