Bed Bath & Beyond Inc. (BBBY) Q1 2010 Earnings Report, Transcript and Summary

Welcome to Bed Bath & Beyond's first quarter of fiscal 2010 results conference call. (Operator Instructions) A rebroadcast of the conference call will be available beginning on Wednesday June 23, 2010 at 6:30 p.m. Eastern Time through 6:30 p.m. Eastern Time on Friday, June 25, 2010. To access the rebroadcast, you may dial 1-888-203-1112 with the passcode ID of 5237546. Now at this time, it's my pleasure to turn the conference call over to Eugene Castagna, Chief Financial Officer and Treasurer of Bed Bath & Beyond.

Welcome to Bed Bath & Beyond's first quarter of fiscal 2010 conference call. Within the past hour, we issued a press release announcing Bed Bath & Beyond's results for the three month period ended May 29, 2010. During this call, we will comment on some of the first quarter highlights and update on fiscal second quarter and 2010 planning assumptions. Before proceeding I will read the following statement, and I quote: Bed Bath & Beyond's fiscal press release and comments made during this call may contain forward-looking statements within the meaning of Section 21E of the Securities & Exchange Act of 1934 as amended. Many of these forward-looking statements can be identified by the use of words such as may, will, expect, anticipate, estimate, assume, 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. Please refer to Bed, Bath & Beyond's SEC filings including its Form 10K for the year ended February 27, 2010. The company does not undertake any obligation to update its forward-looking statements.” Joining me on today's call are Leonard Feinstein, Co-Chairman of Bed Bath & Beyond; and Steven Temares, Chief Executive Officer and Member of the Board of Directors. I'm now very pleased to introduce Leonard Feinstein.

I am pleased to report that our company's net earnings per diluted share increased approximately 53% in the fiscal first quarter to $0.52. While the economic environment appears to be showing some signs of stabilizing, it appears the consumer continues to face economic challenges, and the pressures of the macroeconomic environment still persist. As such, we remain cautiously optimistic as we continue fiscal 2010. During the fiscal first quarter, we opened two Bed Bath & Beyond and two buybuy BABY stores, as well as relocated and renovated a number of Bed Bath & Beyond stores. Consolidated store space at May 29, 2010 was approximately 33.9 million sq. feet, an increase of approximately 5% over last year's first quarter. Since the beginning of the fiscal second quarter of 2010, we have opened one additional Bed Bath & Beyond store. We currently operate 1,105 stores, including 968 Bed Bath & Beyond stores in 49 states, The District of Columbia, Puerto Rico, and Canada, as well as 61 Christmas Tree Shops, 31 buybuy BABY stores, and 45 stores under the names Harmon or Harmon Face Values. In addition, we are a partner in a joint venture which operates two stores in the Mexico City market under the name "Home & More. During fiscal 2010, including the five stores we have opened to-date we anticipate opening a total of approximately 55 to 60 stores across all of our concepts. We look forward to expanding into our 50th state, Hawaii, with a Bed Bath & Beyond store expected to open during the fiscal second quarter. We remain committed to, and are excited about the continued growth of all of our merchandize offerings. We continue to apply our stringent standards to growth as we evaluate new store sites as well as continue to review our existing…

Thank you, Len. Good afternoon, everyone, and thank you for participating in this conference call. We are pleased that our first quarter results exceeded our internal planning assumptions. The dedication and talents of our associates and their constant focus on improving the overall customer shopping experience, while at the same time creating a more productive and efficient company are the key to producing the continued strong results we have experienced. As Len said, while it appears that the economic environment may be stabilizing, persistent high unemployment and uncertainty in the economy could continue to pressure the consumer and affect their spending. Although economic challenges persist, our fundamental business strategy has remained unchanged to offer a broader assortment of merchandise at everyday low prices with superior customer service. We continue to systematically challenge the costs associated with running our company, and although during the second half of last year, we anniversaried many of the more significant expense reduction initiatives that we instituted, we continue to strive to find opportunities to lower our operating costs. We also continue to work to enhance our customers' overall shopping experience and remain committed to being our customers first choice for the merchandise categories we offer, domestically, interactively, and over the longer term, internationally. We are confident that our company is well positioned to grow profitably, deliver superior shareholder value and to compete and increase our market share over time. As always, we remain focused on building a business that stands the test of time. In taking this long term approach to building our Bed Bath & Beyond, Christmas Tree Shops, buybuy BABY and Harmon Face Value concepts and through the ongoing effort to cross-merchandise and leverage our best practices across each of our concepts, we expect over time to do more for and with our…

Thanks, Steve. As you heard from Steve, our results exceeded our planning assumptions and we earned $0.52 per diluted share in our fiscal first quarter. We remain encouraged by our positive fiscal first quarter results and continue to be cautiously optimistic about the remainder of the year. The continued uncertainty and the macroeconomic environment makes it difficult to forecast future results. However, the following are our major planning assumptions for fiscal 2010. One, we anticipate opening approximately 55 to 60 stores across all of our concepts. Consistent with our historical experience, we anticipate that new store openings will occur throughout the year, with the majority in our fiscal second half. We remain flexible to take advantage of real estate opportunities that may arise. Two, we expect to continue our program of expanding, renovating, remodeling and/or relocating a number of our stores in fiscal 2010. Three, for the second quarter of fiscal 2010, we are modeling a mid-single digit percentage increase in comparable store sales. As we said in our April conference call, for the second half of fiscal 2010, considering the higher comparable store sales comparisons as well as less visibility to future economic conditions, we are modeling a low-single digit percentage increase in comparable store sales. Four, based on results today and our comparable store sales assumptions, we are modeling consolidated net sales to increase by a high-single digit percentage in the second quarter of fiscal 2010 and consistent with our prior conference call by a mid-single digit percentage in the second half of fiscal 2010. Five, assuming these sales levels, we would expect leverage in our operating profit margin for both the fiscal second quarter and the full year. Six, interest income is expected to be relatively flat versus fiscal 2009. Seven, the second quarter and full year…

Ladies and gentlemen, this concludes today's conference call. Thank you all for listening. You may now disconnect.