This summary is based on the fourth quarter fiscal 2007 earnings call conducted by Bed Bath & Beyond Inc. (BBBY) on April 9, 2008.
Co-Chairman of the Board: Leonard Feinstein
Chief Executive Officer, Director: Steven H. Temares
Senior Vice President, Investor Relations: Ronald Curwin
Key Investors Issues
- The earnings per share declined to 66 cents from 72 cents in previous year quarter.
- Quarterly revenue dropped 3.1% over last year to $1.9 billion.
- Net earnings for fiscal 2007 $562.8 million, on sales of $7.049 billion.
- During the quarter, the company repurchased 3.6 million shares for $102 million.
Fourth Quarter Fiscal 2007 Financial Highlights
The net earnings for the quarter were 66 cents per share or $172.9 million.
Net earnings for the prior year quarter were 72 cents per share or $205.8 million, which included an additional week and reflected a non-recurring charge of approximately 7 cents per share.
Net sales for the quarter were approximately $1.933 billion, a decrease of approximately 3.1% from last year.
Sales for the fiscal fourth quarter of 2007 were impacted by there being one less week in the period and by the fact that the week after Thanksgiving fell in the fiscal third quarter compared to falling in the fiscal fourth quarter of 2006. Comparable store sales decreased by approximately 0.4% compared with an increase of approximately 5.2% in last year''s fiscal fourth quarter.
The gross profit margin decreased by approximately 200 basis points for the fiscal fourth quarter.
These decreases were primarily due to an increase in coupon redemptions associated with a heightened promotional environment, an increase in inventory acquisition costs, and a shift in the mix of merchandise sold as the firm continues to experience a higher percentage of sales of hard line goods.
Selling, general, and administrative expenses for the fiscal fourth quarter were about $540 million, or 27.9% of net sales, compared with approximately $553 million, or 27.7% of net sales in prior year.
The SG&A ratios reflect the slower growth in net sales compared to a year ago. While the firm was slightly more promotional and deleveraged advertising expenses for the quarter as a result of increased distribution of advertising pieces in response to the heightened promotional environment, the firm remains cautious in its response to this environment and anticipates continuing the same approach going forward. Also contributing to the deleverage in SG&A for the quarter were occupancy costs and other expenses partially offset by payroll and payroll related items, which include the prior year non-recurring pretax charge of $30 million related to 409A.
During the quarter, the company repurchased approximately 3.6 million shares of its common stock for an aggregate cost of approximately $102 million.
This included the completion of the $1 billion share repurchase program authorized in 2006. As of March 1, 2008, the balance remaining of the share repurchase program authorized in September 2007 was approximately $967 million dollars.
In the quarter, the firm added 22 Bed Bath & Beyond stores, including its first international store in Canada.
The firm also opened and commenced operations of a new state-of-the-art Christmas Tree Shops distribution center, as well as a new e-service fulfillment center designed to accommodate the growth in online sales. In addition, the firm purchased a building next to its corporate offices in Union, New Jersey, to support its continuing growth. The firm remains on target to operate in excess of 1,300 domestic Bed Bath & Beyond stores
As of March 1, 2008, the company operated a total of 971 stores, including 881 Bed Bath & Beyond stores. In addition, as of March 1, 2008 Christmas Tree Shops operated 41 stores, buybuy BABY operated 9 stores, and 40 stores operated under the names of Harmon and Harmon Face Values. Consolidated store space as of March 1, 2008 was approximately 30.2 million square feet.
- Lower interest income in this year’s fiscal fourth quarter of $5.6 million versus $13.2 million a year ago is a result of lower cash balances, principally due to share repurchase activities in fiscal 2007.
- The company’s provision for income taxes for the fiscal fourth quarter was 34.8%.
The cash and cash equivalents and investment securities as of March 1, 2008 approximated $550 million.
