Bed Bath & Beyond Inc. (BBBY: 42.03 +0.09 +0.21%) recently reported better-than-expected third quarter 2009 results with double-digit growth in both the top-line and the bottom-line.
The company’s quarterly earnings of 58 cents a share was below the Zacks Consensus Estimate of 62 cents, but was up 71% year-over-year from 34 cents reported in the prior-year quarter.
Net sales for the quarter increased 10.8% to $1.97 billion compared to the prior-year quarter. Comparable same-store sales increased 7.3% from the prior-year quarter.
During the quarter, the company opened 16 Bed Bath & Beyond stores, 7 buybuy BABY stores, 4 Christmas Tree Shops, and 1 Harmon Face Values store. The company also closed one Bed Bath & Beyond store. Additionally, through a joint venture, the company operates two stores in the Mexico City market under the name “Home & More.”
The company has a consolidated store space of 33.4 million square feet, reflecting a 5.7% increase from the prior-year quarter.
Gross margin for the quarter expanded 226 basis points (bps) to 41.1% versus 38.9% in the prior-year quarter. The increase was driven by decreases in inventory acquisition costs and coupon redemption as a percentage of sales, which was partially offset by a shift in the mix of merchandise sold to lower margin categories.
The operating margin expanded 478 (bps) to 12.4% from 7.7% in the prior-year quarter.
The company had cash and cash equivalents of $854 million and capital expenditures were $109 million for the quarter.
Based on the third quarter results, management provided earnings guidance for the fourth quarter and full fiscal year 2009. For the fourth quarter, the company expects earnings in the range of $0.67 to $0.71 per share. Full year earnings are expected to be in the range of $2.11 to $2.15 per share.
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