By Ben Fox Rubin
Bed Bath & Beyond Inc.'s (BBBY) fiscal first-quarter profit
improved 15%, topping estimates, as same-store sales and revenue
continued to climb for the home-furnishings retailer.
But, shares dropped 10% after hours to $66.23 as the company
predicted downbeat second-quarter earnings and saw its margins
slide. As of Wednesday's close, the stock has been tracking
all-time highs, enjoying an upward swing since 2009.
The company expects second-quarter earnings of 97 cents to $1.03
a share, missing views of $1.08 from analysts polled by Thomson
Reuters. Bed Bath & Beyond also affirmed its full-year earnings
estimates.
Same store-sales rose 3% in the latest period, in line with the
company's projected 2% to 4% increase.
Bed Bath & Beyond has posted double-digit profit growth
since 2009, helped by cross merchandising, flexibility for local
management and advertising cuts. The retailer has also modestly
increased sales over the past two years while keeping overhead
costs relatively steady.
Building on its recently strong results, the company over the
past two months unveiled its first two acquisitions since
purchasing baby-and-infant-goods retailer buybuy BABY in 2007. Last
month, Bed Bath & Beyond agreed to buy discount chain Cost Plus
Inc. (CPWM) for $550 million, its largest acquisition to date, as
it looks to expand sales of specialty foods and add products that
aren't easily found elsewhere. It followed up that deal with this
month's $105 million purchase of Linen Holdings LLC, a privately
held distributor of bath, bed and table linens and other textile
products.
For the quarter ended May 26, Bed Bath & Beyond reported a
profit of $206.8 million, or 89 cents a share, up from $180.6
million, or 72 cents a share, a year earlier. Net sales grew 5.1%
to $2.22 billion.
In April, the company predicted earnings of 79 cents to 83 cents
a share and revenue growth of 4% to 6%.
Gross margin narrowed again to 40% from 40.6%. The company had
mostly avoided margin contraction in recent years, but has now
posted two straight quarters of weaker margins.
Write to Ben Fox Rubin at ben.rubin@dowjones.com