I don't know what I should feel like most when I shop at Bed Bath & Beyond (NASDAQ:BBBY) -- the mouse finding the cheese at the end of a maze, or a satisfied home-goods shopper. Once you start your shopping journey for bed and bath items, there is no looking back from the great beyond.
As an investor, you'd be hard-pressed to find a better-run company on Wall Street than Bed Bath & Beyond. With a healthy list of competitors -- such as Linens 'n Things (NYSE:LIN), TJX Companies' (NYSE:TJX) HomeGoods, Wal-Mart (NYSE:WMT), Target (NYSE:TGT), Williams-Sonoma (NYSE:WSM), Pier 1Imports (NYSE:PIR), and TuesdayMorning (NASDAQ:TUES) -- efficiency and seasoned merchandising become the name of the game.
The major distinction between Bed Bath & Beyond and its competitors is its squeaky-clean balance sheet. The company has been debt-free for more than eight years -- a run that highlights its ability to avoid succumbing to the temptation of external financial forces and to remain unwavering in the execution of its business plan.
Bed Bath & Beyond also had $1.3 billion in cash and long-term investment securities at the end of the third quarter. The company plans to use some of its cash to buy back shares as part of a newly approved $350 million share repurchase program.
Bed Bath & Beyond earned $0.40 per share in the third quarter, which was a penny better than expectations and 21% ahead of last year's earnings of $0.33 per share. Net sales grew 11%, and same-store sales were up 3.1% over the year-ago quarter.
The company has nearly 700 stores in operation, including 28 Christmas Tree Shops and 32 Harmon Stores, and it plans to add 20 Bed Bath & Beyond stores and four Harmon Stores in the fourth quarter. I learned a long time ago, as a specialty retail analyst, that the company's superior financial record gives it priority over other retailers as far as real estate locations. This freedom of choice has served the company well in its pursuit and stockpiling of desirable properties.
Bed Bath & Beyond shares are trading at a respectable 25 times the fiscal 2005 earnings estimate of $1.60 per share, which is in the range of its expected growth for the year. Investors looking for a solid retailer would be hard-pressed to find a company that is more solid, both financially and operationally.
Shop till you drop and then relax with these retail views:
- Williams-Sonoma Warily Pessimistic
- Tuesday Morning Headache on Monday
- Saving by Spending: Do UPromise?
Fool contributor Phil Wohl spent more than 12 years on Wall Street and does not own shares of any company mentioned in this article.
