BB&B Confident in Spite of Profit Fall

By James Mammarella -- Home Textiles Today, 1/26/2009 12:00:00 AM

Union, N.J. —

While profits fell by more than a third in its third quarter, Bed Bath & Beyond said those results in the current economy show that it is positioned to compete successfully now and in the future.

Leonard Feinstein, co-chairman, told analysts the "decentralized culture" of the 1,026-store specialty retailer yields benefits that are even "more apparent" in tough economic times. He said Bed Bath profits by "the knowledge, independence and customer service of our associates."

Feinstein asserted that BBB, which recently opened its fourth unit in Canada and now operates two stores in a Mexico joint venture, would "strive to become the leading home furnishings retailer" in those countries as well.

Net earnings of 34 cents per diluted share, or $87.7 million, were down 36.5% from 52 cents, or $138.2 million, in the same quarter one year ago. Earnings were within the reduced range the company had announced in early December.

Sales of $1.783 billion were off 0.7% from $1.795 billion last year; comps fell 5.6% in the period.

Steven Temares, ceo, asserted that the company's operating results continue to outpace its competitors. Bed Bath's SG&A costs climbed 90 basis points while gross margin fell 280 points to 38.9% of sales.

By the end of the fiscal year on Feb. 28, the company said it will operate 930 BBB stores, 52 Christmas Tree Shops, 41 Harmon units, and 16 BuyBuyBaby stores. That marks 49 new Bed Bath & Beyond stores for 2008, which Feinstein said "reflects our conservative approach" and "difficulties in commercial real estate." He said the retailer stands by its ultimate goal of 400 additional BBB stores in the United States.

While offering few specifics on merchandise category performance, Feinstein did say that the bridal, baby, gift registry and online areas were all in positive mode.