Bed Bath & Beyond Inc. (BBBY) recently reported better-than-expected fourth quarter fiscal 2009 results with net income of $226 million or 86 cents per share, compared to $141.4 million or 55 cents per share in the year-earlier quarter. For fiscal 2009, Bed Bath reported net income of $600.0 million or $2.30 per share, compared to $425.1 million or $1.64 per share in the previous fiscal.
 
Both the quarterly and fiscal earnings per share surpassed the Zacks Consensus Estimate by 13 cents and 14 cents, respectively. The improved performance during the quarter was primarily due to a 16.7% increase in net sales to $2.2 billion from $1.9 billion in the year-ago quarter. Same-store sales also increased approximately 11.5% during the quarter on a year-over-year basis. 
 
For fiscal 2009, Bed Bath reported net sales of $7.8 billion compared to $7.2 billion in the previous fiscal – an increase of 8.6%. Same-store sales during fiscal 2009 increased 4.4% year over year.
 
Gross margin during the quarter increased 180 basis points to 42.6% versus 40.8% in the prior-year quarter. The increase was driven by decreases in coupon redemption and in inventory acquisition costs, which was partially offset by a shift in the mix of merchandise sold to lower margin categories.
 
The operating margin improved 450 basis points during the quarter to 16.5% from 12.0% in the prior-year quarter, primarily due to lower SG&A expenses attributable to lower advertising, occupancy and payroll expenses as a percentage of net sales. At fiscal-end 2009, Bed Bath had cash and cash equivalents of $1.1 billion, compared to $668.2 million in the year-earlier period.
 
During the quarter, the company opened 8 Bed Bath & Beyond stores, 4 Christmas Tree Shops, 3 buybuy BABY stores, and 3 Harmon Face Values stores. The company also closed one Bed Bath & Beyond store during the quarter to bring its total store count to 1,100. These include 965 Bed Bath & Beyond stores, 61 Christmas Tree Shops stores, 29 buybuy BABY stores and 45 stores under the names of Harmon or Harmon Face Values.
 
Bed Bath also operates 2 stores in the Mexico City market through a joint venture under the name “Home & More.” At quarter end, the company had a consolidated store space of 33.7 million square feet – an increase of approximately 5% compared to the year-earlier period.
 
Subsequent to the quarter end, the company opened one Bed Bath & Beyond store and one buybuy BABY store. During fiscal 2010, Bed Bath anticipates opening approximately 60 stores, including 30 Bed Bath and Beyond stores in the U.S. and Canada, 10 Christmas Tree shops and 20 buybuy BABY stores.
 
For first quarter fiscal 2010, the company expects earnings in the range of 44 cents to 48 cents per share, while for fiscal 2010 earnings are expected to increase by 10% to 15% year over year.
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