Bed Bath & Beyond Pays Cash for Growth: Fool by Numbers
By Anders Bylund
September 27, 2007
Recommended (5)
On Sept. 26, home furnishings retailer Bed Bath & Beyond (Nasdaq: BBBY) released second-quarter earnings for the period ending Sept. 1, 2007.
- Same-store sales improved just 2.2% over the year-ago period, but there are many ways to skin a growing cat. This company does it by building lots of new stores. Eleven stores opened in the quarter, bringing the total to 914 locations under four different names.
- The company remains debt free and plans to fund its fourth repurchase program since 2004 with present and expected future free cash flows.
- Higher inventory acquisition costs, a change in the mix of merchandise sold, and higher postage and paper costs all contributed to the falling margins.
- Bed Bath & Beyond sports a three-star rating (out of five) here at the Motley Fool CAPS community. The company's rating falls between competitor Target (NYSE: TGT), which garners four stars, and Williams-Sonoma (NYSE: WSM), which has only two stars.
(Figures in millions, except per-share data.)
Income Statement Highlights
|
Q2 2008
|
Q2 2007
|
Change
|
|
Sales
|
$1,768
|
$1,607
|
10.0%
|
|
Net Profit
|
$147
|
$146
|
1.0%
|
|
EPS
|
$0.55
|
$0.51
|
7.8%
|
|
Diluted Shares
|
269.5
|
284.7
|
(5.3%)
|
Get back to basics with the income statement.
Margin Checkup
|
Q2 2008
|
Q2 2007
|
Change*
|
|
Gross Margin
|
41.4%
|
42.2%
|
(0.8)
|
|
Operating Margin
|
12.5%
|
13.7%
|
(1.2)
|
|
Net Margin
|
8.3%
|
9.1%
|
(0.7)
|
*Expressed in percentage points.
Margins are the earnings engine.
Balance Sheet Highlights
|
Assets
|
Q2 2008
|
Q2 2007
|
Change
|
|
Cash + ST Invest.
|
$584
|
$817
|
(28.6%)
|
|
Inventory
|
$1,603
|
$1,422
|
12.7%
|
|
Liabilities
|
Q2 2008
|
Q2 2007
|
Change
|
|
Accounts Payable
|
$649
|
$592
|
9.6%
|
The balance sheet reflects the company's health.
Cash Flow Highlights
|
Q2 2008
|
Q2 2007
|
Change
|
|
Cash From Ops.
|
$160
|
$152
|
5.7%
|
|
Capital Expenditures
|
$76.8
|
$57.0
|
34.6%
|
|
Free Cash Flow
|
$83.5
|
$94.6
|
(11.8%)
|
|
Owner Earnings
|
$109
|
$120
|
(9.2%)
|
Free cash flow is a Fool's best friend.
Bed Bath & Beyond is a Motley Fool Inside Value selection and also a Motley Fool Stock Advisor pick. Try either service free for 30 days.
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