- Net Earnings for Quarter Increase to $.51 per diluted share - Quarterly Net Sales Increase by 12.3% - Quarterly Comparable Store Sales Increase by 4.8% - Independent Review of Option Grants and Procedures
UNION, N.J., Sept. 20 /PRNewswire-FirstCall/ -- Bed Bath & Beyond Inc. today reported net earnings of $.51 per diluted share ($145.5 million) in the fiscal second quarter ended August 26, 2006. In the fiscal second quarter of 2005, the Company reported net earnings of $.47 per diluted share ($141.4 million). Net sales for the fiscal second quarter of 2006 were approximately $1.607 billion, an increase of approximately 12.3% from net sales of approximately $1.431 billion reported in the fiscal second quarter of 2005. Comparable store sales in the fiscal second quarter of 2006 grew by approximately 4.8%, compared with an increase of approximately 4.5% in last year's fiscal second quarter.
For the fiscal first half ended August 26, 2006, the Company reported net earnings of $.86 per diluted share ($246.0 million). In the fiscal first half of 2005, the Company reported net earnings of $.80 per diluted share ($240.3 million). Net sales for the fiscal first half of 2006 were approximately $3.003 billion, an increase of approximately 12.2% from net sales of approximately $2.676 billion in the corresponding period a year ago. Comparable store sales for the fiscal first half of 2006 increased by approximately 4.8%, compared with an increase of approximately 4.4% in last year's fiscal first half.
The fiscal second quarter and fiscal first half of 2006 results included incremental stock-based compensation expense resulting from the early adoption, at the beginning of the fiscal third quarter of 2005, of Statement of Financial Accounting Standards 123(R).
The Company also announced an independent committee of its Board of Directors is carrying out a review of the Company's stock option grants and procedures. The independent committee's review was initiated voluntarily by the Company and is being conducted with the assistance of independent legal counsel and outside accounting experts selected by the committee. The independent committee's review is not complete. The Company expects to report further with respect to the review in its Form 10-Q for the quarter ended August 26, 2006, which the Company expects to file on a timely basis on or before October 5, 2006.
As of August 26, 2006, the Company operated a total of 831 stores, including 762 Bed Bath & Beyond stores (11 of which were opened during the fiscal second quarter) in 46 states, the District of Columbia and Puerto Rico. In addition, as of that date, Christmas Tree Shops, Inc. operated 31 stores in 8 states (one of which was opened during the fiscal second quarter) and Harmon Stores, Inc. operated 38 stores in 3 states. Consolidated store space as of August 26, 2006 was approximately 26.2 million square feet. Since the beginning of the fiscal third quarter, on August 27, 2006, 7 Bed Bath & Beyond stores have been opened, bringing to 769 the total number of Bed Bath & Beyond stores presently in operation.
Bed Bath & Beyond Inc. and subsidiaries (the "Company") is a nationwide chain of retail stores, operating under the names Bed Bath & Beyond, Christmas Tree Shops and Harmon. The Company sells a wide assortment of merchandise principally including domestics merchandise and home furnishings as well as food, giftware and health and beauty care items. Shares of Bed Bath & Beyond Inc. are traded on NASDAQ under the symbol "BBBY" and are included in the Standard & Poor's 500 and Global 1200 Indices and the NASDAQ-100 Index. The Company is counted among the Fortune 500 and the Forbes 2000.
This press release may contain forward-looking statements. Many of these forward-looking statements can be identified by use of words such as may, will, expect, anticipate, estimate, assume, continue, project, plan and similar words and phrases. The Company's actual results and future financial condition may differ materially from those expressed in any such forward- looking statements as a result of many factors that may be outside the Company's control. Such factors include, without limitation: changes in the retailing environment and consumer preferences and spending habits; demographics and other macroeconomic factors that may impact the level of spending for the types of merchandise sold by the Company; general economic conditions; unusual weather patterns; competition from existing and potential competitors; competition from other channels of distribution; pricing pressures; the cost of labor, merchandise and other costs and expenses; the ability to find suitable locations at acceptable occupancy costs to support the Company's expansion program; and the outcome of the independent committee's review of the Company's stock option grants and procedures. The Company does not undertake any obligation to update its forward-looking statements.
BED BATH & BEYOND INC. AND SUBSIDIARIES Consolidated Statements of Earnings (in thousands, except per share data) (unaudited) Three Months Ended Six Months Ended August 26, August 27, August 26, August 27, 2006 2005 2006 2005 Net sales $1,607,239 $1,431,182 $3,003,202 $2,675,603 Cost of sales 928,990 829,398 1,734,855 1,553,038 Gross profit 678,249 601,784 1,268,347 1,122,565 Selling, general and administrative expenses 458,627 383,907 899,975 753,804 Operating profit 219,622 217,877 368,372 368,761 Interest income 9,928 8,005 19,587 15,113 Earnings before provision for income taxes 229,550 225,882 387,959 383,874 Provision for income taxes 84,015 84,480 141,993 143,569 Net earnings $145,535 $141,402 $245,966 $240,305 Net earnings per share - Basic $0.52 $0.48 $0.88 $0.81 Net earnings per share - Diluted $0.51 $0.47 $0.86 $0.80 Weighted average shares outstanding - Basic 280,567 295,458 280,385 294,936 Weighted average shares outstanding - Diluted 284,654 301,362 284,903 300,208 BED BATH & BEYOND INC. AND SUBSIDIARIES Consolidated Balance Sheets (in thousands, unaudited) August 26, August 27, 2006 2005 Assets Current assets: Cash and cash equivalents $167,994 $296,477 Short term investment securities 649,253 703,395 Merchandise inventories 1,421,922 1,238,875 Other current assets 143,854 114,173 Total current assets 2,383,023 2,352,920 Long term investment securities 332,980 353,516 Property and equipment, net 801,438 645,574 Other assets 193,328 169,268 $3,710,769 $3,521,278 Liabilities and Shareholders' Equity Current liabilities: Accounts payable $592,210 $503,056 Accrued expenses and other current liabilities 242,487 249,368 Merchandise credit and gift card liabilities 123,510 93,907 Income taxes payable 57,923 50,255 Total current liabilities 1,016,130 896,586 Deferred rent and other liabilities 145,419 131,701 Total liabilities 1,161,549 1,028,287 Total shareholders' equity 2,549,220 2,492,991 $3,710,769 $3,521,278 BED BATH & BEYOND INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (in thousands, unaudited) Six Months Ended August 26, August 27, 2006 2005(1) Cash Flows from Operating Activities: Net earnings $245,966 $240,305 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation 62,603 52,303 Amortization of bond premium 2,007 4,458 Stock-based compensation 24,287 - Excess tax benefit from stock-based compensation 1,775 18,523 Deferred income taxes (20,135) (650) Increase in assets: Merchandise inventories (120,202) (86,847) Trading investment securities (1,392) - Other current assets (20,792) (17,507) Other assets (291) (173) Increase (decrease) in liabilities: Accounts payable 68,734 52,746 Accrued expenses and other current liabilities (1) (5,372) Merchandise credit and gift card liabilities 9,996 6,846 Income taxes payable (34,107) (31,109) Deferred rent and other liabilities 15,275 13,194 Net cash provided by operating activities 233,723 246,717 Cash Flows from Investing Activities: Purchase of held-to-maturity investment securities (124,124) (179,771) Redemption of held-to-maturity investment securities 138,011 107,147 Purchase of available-for-sale investment securities (670,425) (955,075) Redemption of available-for-sale investment securities 471,665 922,875 Capital expenditures (135,760) (88,261) Net cash used in investing activities (320,633) (193,085) Cash Flows from Financing Activities: Proceeds from exercise of stock options 10,225 27,404 Excess tax benefit from stock-based compensation 4,504 - Repurchase of common stock (855) - Payment of deferred purchase price for acquisition (6,667) (6,667) Net cash provided by financing activities 7,207 20,737 Net (decrease) increase in cash and cash equivalents (79,703) 74,369 Cash and cash equivalents: Beginning of period 247,697 222,108 End of period $167,994 $296,477 (1) Reflects the accrual for purchases of capital expenditures as a non- cash investing activity to conform with current presentation.
SOURCE Bed Bath & Beyond Inc.
CONTACT: Investors, +1-908-688-0888, Ronald Curwin, Ext. 4550, or Kenneth C. Frankel, Ext. 4554, or Paula J. Marbach, Ext. 4552