Temares takes top spot at Bed Bath & Beyond

UNION, NJ — Putting up two major milestones in its 32nd year, its 11th as a public company, superstore Bed Bath & Beyond has promoted Steven Temares to the top spot of ceo, and at the same time recorded its first-ever billion-dollar quarter.

In a long-planned changing of the guard, Temares moved up to the top job, and Warren Eisenberg and Leonard Feinstein, co-founders of the chain, stepped down as co-ceos but will continue as co-chairmen.

Temares joined Bed Bath & Beyond in 1992 and rose to prominence in a usually unheralded, but vital, role — heading up the company's real estate operations, scouting out new locations and negotiating leases. He was named executive vp and coo in January 1997 and was promoted to president in June 1999.

Racing past a second major milestone, the retailer put up its first-ever billion-dollar quarter, virtually ignoring a soft economy that's hammered most American retailers, pushing sales up by 19.4 percent, to $1.05 billion. Fueled by continued rapid expansion, sales climbed sharply higher, even though the rate of growth slowed somewhat in the broadly weak retail environment. Same-store sales came in at 4.1 percent, still strong, but off from the 11.9 percent gain recorded the year before.

Profits in the all-important holiday quarter, driven by cost cuts and stronger margins, surged by 27.4 percent, to $105.3 million from $82.7 million last year.

Driving the bottom-line strength, costs were pared by 90 basis points, or nine-tenths of a percentage point, to 26.2 percent of sales from 27.1 percent a year ago. Average gross margin gained strength modestly, rising by 20 basis points, to 42.3 percent from 42.1 percent last year.

Remarkably, especially given the weak retail environment, Bed Bath pushed its operating margin — operating profits measured as a percentage of sales — sharply higher during the quarter, to 16.1 percent from 15.0 percent. That means that on a pre-tax basis, the retailer pocketed roughly $0.16 of every dollar it took in at the register.

Wall Street clearly embraced the news, and pushed the retailer's stock up by $0.63 a share, or 1.8 percent in value, to $36.11 on April 2, the morning after the news came out.

For all of last year, Bed Bath profits skyrocketed by 37.6 percent, to $302.2 million from $219.6 million. Sales for all of 2002 jumped up by 25.2 percent, to $3.7 billion from $3.0 billion the preceding year. In a remarkable feat, same-store sales during 2002 climbed by 7.9 percent, actually beating the prior year's increase of 7.1 percent.