This is a summary of the first quarter fiscal 2008 earnings call conducted by Bed Bath & Beyond, Inc. (BBBY: chart) on June 25, 2008.

Management:
CEO & Director: Steven H. Temares
Senior VP of IR: Ronald Curwin
Co-Chairman of the Board: Warren Eisenberg

Key Investor Issues:

- The company earned $0.30 per share in the fiscal quarter ended May 31, 2008 compared with earnings of $0.38 per share a year ago.
- Net sales for the fiscal first quarter were approximately $1.6 billion, that’s 6.1% higher than the corresponding fiscal 2007 period.
- Gross profit margin shrank to 39.7% from 41.5%.
- The company has been trying to strengthen its international operations, opening its first store in Canada and investing $4 million in a joint venture with Home & More SA de CV, a Mexican housewares retailer.

First Quarter Highlights:

The company earned $0.30 per share in the fiscal quarter ended May 31, 2008 compared with earnings of $0.38 per share a year ago.

These results which were at the upper end of the April 9th guidance range continue to reflect the challenging macroeconomic environment. The retail sector for home related products continues to be affected by the macroeconomic environment including the slowdown in housing, particularly in certain parts of the country such as Arizona, California, Florida and Nevada, tight credit markets, high energy costs and ongoing consolidation.

The company opened nine new Bed Bath & Beyond stores during the fiscal first quarter.

- Thus the company ended the period with 890 stores in 49 states, the District of Columbia, Puerto Rico and Canada.
- As of May 31, 2008 the company operated 41 Christmas Tree Shops, 10 buybuy Baby stores, one of which was opened during the fiscal first quarter and 40 stores under the names Harmon and Harmon Face Values.
- Consolidated store space at May 31, 2008 was approximately 30.4 million square feet.

As previously reported, the company also commenced operations of a new state of the art Christmas Tree Shops distribution center as well as a new in service fulfillment center which will facilitate the growth in online sales. The company also purchased a building adjacent to its corporate offices in Union, New Jersey.

Net sales for the fiscal first quarter were approximately $1.6 billion, that’s 6.1% higher than the corresponding fiscal 2007 period.

First quarter same-store sales were up 0.8% vs. 1.6% a year ago. Net sales and same store sales were negatively affected by the economic slowdown in general and by issues specific to the housing and mortgage industries in particular. In those areas of the country that have been reported as being the most significantly affected by these issues, notable Arizona, California, Florida and Nevada, comp sales were noticeably weaker than in less affected areas.

The gross profit margin decreased by approximately 180 basis points for the quarter.

The decline was primarily due to an increase in coupon redemption associated with a heightened promotional environment, an increase in inventory acquisition costs and the shift in the mix of merchandise sold as the company continues to experience a higher percentage of sales of hard lines.

Selling, general and administrative expenses for the quarter were $537 million, 32.6% of net sales vs. $492 million or 31.7% of net sales a year ago.

SG&A as a percent of sales increased by approximately 90 basis points for the quarter primarily due to increases in advertising expenses as a result of the increased distribution of advertising pieces and response to the heightened promotional environment and relative increases in occupancy costs including rent, real estate taxes and depreciation. Historically, first quarter net sales are the lowest of any quarter so relatively tend to deleverage SG&A more than in any of the three succeeding quarters when net sales have historically been higher.

Reflecting the movement in the gross profit margin and SG&A expenses, the operating profit margin for the first quarter was lower by 270 basis points.

Interest income in this year’s difficult first quarter of $4.5 million versus $9.9 million a year ago is a result of lower cash balances reflecting share repurchases and lower interest rates from a year ago.

The company continues to plan capital spending for all of fiscal 2008 to be approximately $265 million. The widening gap between Bed Bath & Beyond and its competitors creates a significant opportunity for the company to continue to increase market share.

Since becoming a public company through reinvesting in its business, Bed Bath & Beyond has gone from 34 stores in nine states during approximately $168 million in net sales to ending fiscal 2007 with over 970 stores in 49 states, the District of Columbia, Puerto Rico and Canada doing approximately $7 billion dollars in net sales. In addition, the company recently announced the formation of a joint venture with Home & More, a privately held home products retailer operating two stores in Mexico.

Major Planning Assumptions for Fiscal 2008: