Bed Bath & Beyond Pays Cash for Growth: Fool by Numbers

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*
41.4%	42.2%	(0.8)
12.5%	13.7%	(1.2)
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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