Bed Bath & Beyond Inc (BBBY) 2001 Q1 法說會逐字稿

BED BATH & BEYOND INC. CONFERENCE CALL

Ladies and gentleman, thank you for standing by and welcome to the Bed Bath & Beyond's fiscal first quarter of fiscal year 2000, result conference call. All participants are in a listen-only mode for the duration of the call. This call is being recorded. I will now turn the call over to Ron Curwin, Chief Financial Officer and Treasurer of Bed Bath & Beyond. Please go ahead, Sir.

Thank-you. Good afternoon and welcome to Bed Bath & Beyond's first quarter of fiscal 2001, conference call. As you will hear shortly and as indicated in our first quarter news release, our financial goals for the period were achieved. We hope manager's review of the results of operations, financial position, cash flows, and other comments relative to our business will be useful to you. Before proceeding, I will read the following statement and I quote, "Bed Bath & Beyond's fiscal fourth quarter news release and comments made during this call may contain forward-looking statements. Forward-looking statements and all other statements that maybe made in the news release and in this conference call that are not historical facts are subject to a number of risks and uncertainties and actual results may defer materially. Please refer to Bed Bath & Beyond's SEC filings including its form 10-K for the year-ended March 3, 2001, for more information or risk factors that could cause actual results to differ. The company does not undertake any obligation to update its forward-looking statements." Warren Eisenberg, who co-founded our company in 1971 with Leonard Feinstein, and serves together with Warren as Co-Chief Executive Officer and Co-Chairman of the board of Bed Bath & Beyond's leads of today's call. Steven Temares, President and Chief Operating Officer and member of the Board of Directors will then review the fiscal first quarter results. At the conclusion of Steven's comments, we will review some additional financial highlights and comments with respect to our fiscal 2001 outlook. At the completion of this call, you may call us at 1908-688-0888 with your comments or questions. Ken Frankel is at extension 4554 and I am at extension 4550. If neither of us is immediately available, try Paula Marbach at extension 4552 or leave a message. A replay of this call will be available at 1800-633-8284 from 6:30 p.m. Eastern Time today to 6:30 p.m. Eastern Time, Saturday, June 23rd, 2001, reservation number 1895-1422. I am now pleased to introduce Warren Eisenberg. Warren?

Good afternoon. Our 30th anniversary has gotten off to a good start, with net sales up 25.4% and net earnings up 28.4%. These results continued our record of uninterrupted growth and of leaving or exceeding our operating plan in each and every one of the 36 fiscal quarters since we became a public company, a little over 9 years ago. During our first fiscal quarter, we added 11 new stores ending the period with 322 stores in 43 states. We have added an additional store since the beginning of our fiscal second quarter. Our expansion plans are reviewed regularly and as previously noted, we anticipate opening approximately 80 stores this year, and also as noted, they will be somewhat smaller on average than those opened in prior years. Despite our rapid growth, our share of approximately $75 billion home goods market remains under 4%, affording us substantial expansion opportunities. Industry growth demographics remain quite strong, and we now believe that we can operate with an 850 stores in the US. We also continue to explore other growth opportunities and are pleased to note that the planned opening of the store right up this year in Puerto Rico, our first store outside the continent in the US. At Beyond Bath and Beyond, we have always been dedicated to serving our customers and are always focused on the bottom line. The organization we built continues to establish and achieve impressive goals. As the retail industry continues to consolidate, we are pleased that by any measure the performance gap between ourselves and our direct competitors is widening. We expect this trend to continue.

Everyone at Bed Bath & Beyond remains dedicated to providing our customers with the very best shopping experience possible and to make this year, our 30th anniversary year our best ever. Now, I will turn the call over to Steven Temares. Steven?

Thank-you, Warren. Good afternoon everyone and thank you for participating in this conference call. A short while ago, we released the news of another quarter a strong earnings growth, positive cash flow, and new store development, which ended with our strongest balance sheet ever. To briefly touch on the highlights, net earnings for our first quarter was $30 million equivalent to ¢10 per share, up approximately 28.4% from the 23.4 million or ¢8 per share earned in the first quarter a year ago. Earnings per share amounts have been adjusted to reflect the 100% stock dividend distributed in August 2000, which was the fourth 100% stock dividend since our June 1992, initial public offering. In achieving these results, we once again give credit to our highly valued customers and to our over 15,000 Bed Bath & Beyond associates from coast-to-coast who continued to demonstrate their ability to provide superior customer service and to perform at a high-level of execution. The credit to our associates and the recognition given to them cannot be overstated, especially in light of the challenging retail environment including going out of business sales and the heightened promotional activity currently occurring in the marketplace. Net sales for the first quarter were approximately $575.8 million about 25.4% higher than in the corresponding fiscal 2000 period. First quarter comps of 4.4% versus a comparable store sales increase of 5% a year ago were at the high-end of the 3% to 5% range, which has been and remains our comp-sales guidance going forward.

In establishing our planning assumptions, which Ron will review in a few minutes, we continue to attempt to take into consideration all significant factors both internal and external, which are likely to affect our operating performance. Gross profit for the first quarter was $235 million or 40.8% of net sales compared with the 187.3 million or 40.8% of net sales during the first quarter of 2000. The flat gross profit was consistent with plan, again given the present economic environment as indicated by financial results reported by other retailers, we are pleased that our gross margin remained solid and that we continue to limit net promotional expenditures to a level consistent with prior periods. Selling, general and administrative expenses were about $189.4 million during the fiscal first quarter compared with approximately a 151 million in the corresponding quarter a year ago. As a percentage of net sales, SG&A for our first quarter were at 32.9% unchanged from a year ago quarter. While we believe, we continue to offer our customers the most outstanding merchandize assortments in our retail segment at everyday low prices, we also recognize the widespread opportunity to improve and we continue to undertake initiative to do so in all aspects of our company. Warren, commented earlier about our fiscal 2001, expansion plans about approximately 80 new super stores we plan to open this year. Today there are 323 Bed Bath & Beyond stores serving our customers in 43 states.

I am pleased to say that most of the projected fiscal 2001, locations are well underway, and that our fiscal 2002, program is also progressing well. As we have often said our decentralized culture, which puts much of the decision-making closest to our customers has been responsible for much of the success we have achieved over the past three decades. We believe this operating philosophy and the entrepreneurial and dedicated associates it produces, continued to provide us with a unique competitive advantage in the marketplace leading to our consistent long-term performance. We intend to continue our longstanding policy of investing heavily in our infrastructure to support our vision of where we expect Bed Bath & Beyond to be in the future. We continue to see the fruits of those investments, which not only support current operations, but are expected to reinforce the much larger, more successful company which we always envisioned and which we are rapidly becoming. We will continue to utilize this balanced strategy of reinvesting for the company's future, while also achieving planned and current operating results. So to recap, Bed Bath & Beyond's fiscal first quarter produced earnings of $30 million or ¢10 per share, about 28.4% higher than a year ago on an approximately 25.4% increase in net sales and a 4.4% gain in same store sales. We are extremely well positioned to take advantage of any opportunities and respond to all challenges that may lie ahead. Our entire organization is dedicated to giving our customers the very best shopping experience possible and through these efforts producing exceptional financial results.

I look forward to our next call on September 25th, 2001, at which time we will review with you the accomplishments of the second quarter and the first half of fiscal 2001. I will now turn the call back to Ron. At the conclusion of the call, Ron and Ken Frankel, our Director of Financial Planning, will be in their offices to take your questions.

Thanks Steve. Our debt-free balance sheet as of June 2nd, 2001, remains strong and flexible. Cash and cash equivalents approximated $276 million. A year ago, they were about $136 million. Merchandize inventories at June 2001, was 697 million compared with 548 million a year ago. On a per square foot basis, inventories increased about 2.8% in line with plan. Inventories continued to be tailored by store to meet the demands of our customers. Capital expenditures for the first quarter primarily for new stores, store renovations, and information technology including E-service amounted to approximately $24 million compared with approximately $19 million in last year's first quarter. Depreciation and amortization approximated 14.4 million up from about 9.9 million a year ago. Shareholders equity at June 2nd, 2001, was approximately 869 million. A year ago, it was about 601 million. As a reminder, fiscal year 2001, will be a 52-week period ending on Saturday, March 2nd, 2002. Fiscal 2000, which ended on March 3, 2001, represented 53 weeks including one extra week in the fiscal fourth quarter. In our fiscal 2000, year-end conference call on April 4th, we introduced our major and planning assumptions for fiscal 2001, which are now as follows: (1) Of the approximately 80 new stores planned or the full year, 11 as previously noted were open during our first quarter. Estimated new store openings for the balance of the year are now as

Q2 20, Q3 45, and Q4 4.

Total store space additions for the full year including stores already opened our estimated at approximately 2.4 million sq. ft. (2) We expect that our expansion will continue to be funded with internally generated cash. (3) First year net sales for new stores are projected to be between $150 and $175 per sq. ft. Net sales and comp-store sales are projected to grow during fiscal 2001, in the low 20s and 3% to 5% ranges respectively. (4) Relatively flat gross profit margins combined with SG&A expense leverage are expected to produce a modest improvement in operating profit margins. (5) Higher projected levels of investable funds combined with the expected lower average interest rates are expected to result in an increase in interest income in fiscal 2001. (6) Capital expenditures for all of fiscal 2001, are planned at approximately 160 million, mostly for new stores and information technology enhancements. Depreciation and amortization are estimated to be approximately $70 million for the year. (7) Income taxes will be provided at 38 and 0.5% of pretax earnings. Based on the foregoing and other assumptions, we are comfortable with consensus estimates of ¢18 and ¢72 per share for the fiscal second quarter and fiscal year 2001 respectively. As Steve said, our next call will be on September 25th, 2001, at which time we will review our fiscal second quarter results. This concludes our conference call. Thanks for your interest in Bed Bath & Beyond and for listening.

Ladies and gentlemen, that does conclude your conference call today. We thank you for your participation and ask that you please disconnect your line.