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.

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.

At the time of publication, Anders Bylund had no position in any company mentioned. Fool rules are here.