Bed Bath closes in on $1B qtr.
By Don Hogsett -- Home Textiles Today, 6/24/2002 12:00:00 AM
UNION, NJ —
Defying all odds and expectations — and flourishing in a retail environment that is slowly choking other full-price retailers — home furnishings superstar Bed Bath & Beyond turned in a virtuoso first-quarter performance, pushing profits up an exhilarating 54.3 percent.
Redefining the idea of a "blow-out quarter," and raising the bar high for virtually every other American retailer, the home furnishings superstore drove sales higher by 34.9 percent, to $776.8 million from $575.8 million. If it can roughly maintain the same level of sales over the next year or so, Bed Bath & Beyond is on track to generate its first billion-dollar quarter, perhaps as soon as next summer.
And acting like it walks on water, the retailer pushed its same-store sales up by 13.2 percent, defying a retail environment that's crushing department stores and full-price outlets as consumers flock to the nation's big discounters for more and more of their needs.
Driving profits sharply higher, in addition to the stronger sales, the retailer managed to slash its costs, widen margins and keep inventories tightly controlled.
Reversing a recent trend of modest margin erosion, average gross margin widened to 41.0 percent from 40.8 percent a year ago. Bolstered by the wider margins and stronger sales, gross margin dollars improved by 35.4 percent, to $318.4 million from $235.0 million.
Hacking away at costs, Bed Bath & Beyond reduced expenses by 130 basis points, or 1.3 percentage points, to 31.6 percent of sales from 32.9 percent the prior year.
Lifted by the stronger margins and lower costs, operating profits shot up by almost two-thirds, rising by 59.4 percent, to $72.7 million from $45.6 million the preceding year.
In another big lift to the bottom line, inventories were tightly controlled, rising by just 22.0 percent, compared with the 34.9 percent sales growth.
At the beginning of the month, the chain had 409 stores in operation in 44 states and Puerto Rico, including 13 new stores opened during the quarter. Since the beginning of the second quarter, the company has opened six new stores and this year plans to open a total of 88 new units. In addition, during the first quarter, the retailer acquired Harmon Stores Inc., a health and beauty care retailer.
Bed Bath & Beyond Inc.
|Qtr. 6/1 (x000)||2002||2001||% CHG|
|Oper. income (EBIT)||72,701||45,602||59.4|
|Per share (diluted)||0.15||0.10||50.0|
|Average gross margin||41.0%||34.9%||—|
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