Bed Bath & Beyond Inc. (BBBY) Q1 2011 Earnings Report, Transcript and Summary

Welcome to Bed Bath & Beyond's First Quarter Fiscal 2011 Results Conference Call. [Operator Instructions] This conference is being recorded. A rebroadcast of the conference call will be available beginning on Wednesday, June 22, 2011, at 6:30 p.m. Eastern Time through 6:30 p.m. Eastern Time on Friday, June 24, 2011. To access the rebroadcast, you may dial 1 (888) 203-1112 with a passcode ID of 8357218. At this time, it's my pleasure to turn the conference call over to Mr. Gene Castagna, Chief Financial Officer and Treasurer of Bed Bath & Beyond. Please go ahead, sir.

Thank you, and good afternoon. Welcome to Bed Bath & Beyond's First Quarter of Fiscal 2011 Conference Call. Within the past hour, we issued a press release announcing Bed Bath & Beyond's results for the 3-month period ended May 28, 2011. During this call, we will comment on some of the first quarter highlights and update our fiscal second quarter and full fiscal year 2011 planning assumptions. Before proceeding, I will read the following statement, and I quote: "Bed Bath & Beyond's fiscal first quarter 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, approximate, estimate, assume, continue, model, project, plan and similar words or phrases. The company’s actual results or future financial condition may differ materially from those expressed in any such forward-looking statement 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 10-K for the year ended February 26, 2011. 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. Len?

Good afternoon. I am pleased to report that our company's net earnings per diluted share increased approximately 38% in the fiscal first quarter to $0.72. We are pleased that we have been able to continue our strong performance in terms of earning growth, cash flow generation and overall financial strength as we continue to work to build a business that will stand the test of time. During the first quarter, we opened 3 Bed Bath & Beyond stores and 2 buybuy BABY stores, as well as closed 1 Bed Bath & Beyond store and 1 Harmon store. Additionally, we continue to relocate and renovate Bed Bath & Beyond stores. Consolidated store space at May 28, 2011, was approximately 35.2 million square feet, an increase of approximately 4% over last year's first quarter. Since the beginning of the fiscal second quarter of 2011, we have opened 1 additional Bed Bath & Beyond store, 5 buybuy BABY stores and 1 Christmas Tree Shop store. Including these stores, we currently operate 1,149 stores, including 985 Bed Bath & Beyond stores in all 50 states, the District of Columbia, Puerto Rico and Canada, as well as 67 Christmas Tree Shops, 52 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 2 stores in the Mexico City market under the name Home & More. During fiscal 2011, including the 12 stores we have opened to date, we anticipate that the total number of new store openings will be approximately 40 to 45 stores across all of our concepts. Currently, we believe that fiscal 2011 store openings by concept will be substantially similar to fiscal 2010 with a slight shift to several more buybuy BABY stores and slightly fewer…

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. We believe the dedication and talent 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 keys to producing the continued strong results we have experienced. As Len said, we are also pleased that we have been able to continue our strong performance in terms of earnings growth, cash flow generation and overall strength as we continue to work to build a business that will stand the test of time. While a number of economic challenges persist, including higher commodity prices, relatively high unemployment, a sluggish housing market and fragile consumer confidence, our fundamental business strategy remains unchanged to offer a broad assortment of merchandise at everyday low prices with superior customer service. As always, we will continue to work to enhance our customers' overall shopping experience, and we 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, compete for and increase our market share and, over the long term, continue to grow shareholder value. In taking this long term approach to building our Bed Bath & Beyond, Christmas Tree Shops, buybuy BABY and Harmon Face Values concepts and through the ongoing efforts to cross merchandise and leverage our best practices across all our concepts, we expect, over time, to do more for and with our customers. Turning to our fiscal first quarter 2011 performance, as reported earlier today, our net earnings per diluted share were $0.72, an increase of…

Thanks, Steve. As you heard from Len and Steve, our results exceeded our planning assumptions, and we earned $0.72 per diluted share in our fiscal first quarter. We were encouraged by our positive fiscal first quarter results and continue to be cautiously optimistic about the remainder of our fiscal year. The following are our major planning assumptions for the remainder of fiscal 2011. One, including the 12 stores open so far this year, we anticipate that the total number of new store openings will be approximately 40 to 45 stores across all of our concepts. Currently, we believe that fiscal 2011 store openings by concept will be substantially similar to fiscal 2010 with a slight shift to several more buybuy BABY stores and slightly fewer Bed Bath & Beyond stores. As the year progresses and we gain greater visibility, the total number of stores that we will open may be updated. We will continue to place Harmon Face Values health and beauty care offerings in stores across all of our concepts. As always, we remain flexible to take advantage of real estate opportunities that may arise. Two, we expect to continue our program of expanding, renovating and/or relocating a number of our stores in fiscal 2011. Three, we are modeling a 2 to 4 percentage increase in comparable store sales for the second quarter and full fiscal year. Four, based on these comparable store sales assumptions, we are modeling consolidated net sales to increase by 5% to 7% in the second quarter and full year of fiscal 2011. Five, assuming these sales levels, in addition to planning the continuation of the shift in the mix of merchandise sold to lower margin categories, we are modeling our operating profit to be in the range of flat to slightly leveraged for the…

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