- 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