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BED BATH SHARES SURGE ON 2ND-QUARTER REPORT.

UNION, N.J.-Bed Bath & Beyond continues to outpace the competition. The retailer's recently released second-quarter results bucked an industrywide trend of depressed quarterly sales as well as sagging monthly and quarterly comparable-store sales.

Dan Wewer, analyst with Deutsche Banc Alex. Brown, said the specialty retailer's results "provide further evidence that Bed Bath & Beyond continues to separate itself from the competition." Wewer noted that comp sales grew 4.8 percent, "ahead of our 4 percent estimate, and significantly better than other home goods retailers."

During the quarter ended Aug. 1, net earnings climbed to $54 million, or 18 cents per share, from $43.6 million, or 15 cents per share, in the same period last year. Sales rose to $713.6 million from $589.4 million. The retailer's operating profit for the quarter came in at $84.7 million, up 21 percent from the prior year's $70 million. The gross profit margin increased slightly in the quarter to 40.9 percent from 40.8 percent.

Steve Temares, president and chief operating officer, told Wall Street the retailer's ongoing success can be attributed to customer service. "The goal of complete customer satisfaction remains the very reason for our existence, and through our decentralized organization, which empowers our personnel to do everything possible to please our customers, we continue to make important progress toward that goal."

Investors were pleased with the company's results. Shares rose 9 percent following the quarterly report, and analysts reaffirmed their position on the stock. Lehman Bros. analyst Alan Rifkin reiterated a "2 Buy" rating on the stock and tagged it with a $36 price target. Shares have been trading at around $26.

Rifkin noted that the retailer continues to build a "cash horde," further strengthening its financial position. "The company finished the second quarter with the strongest balance sheet ever, with $338.8 million in cash vs. $147.7 million a year ago," Rifkin said in his report last week. "With an increasingly solid cash position, well-managed capital expenditures and zero long-term debt, Bed Bath & Beyond's balance sheet gives the company significant financial flexibility and a clear ability to finance growth internally."

Rifkin and several other analysts who track the stock also see sustained growth in the long term for the retailer.

During the quarter, the company opened 22 new stores, which included a unit in New Hampshire, Bed Bath & Beyond's first entry in that state. Fifteen more stores have opened since the end of the second quarter. The new stores follow the company's recent trend toward a smaller footprint of about 30,000 square feet, compared with the previous average of 40,000 square feet.

In addition, the company elected two new board members: Vicki Morrison, a partner with the New Jersey law firm of Riker, Danzig, Scherer, Hyland & Perretti LLP, and Dean Adler, co-founder of Lubert-Adler Partners, a private-equity real estate opportunity group based in Philadelphia.
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Author:Zaczkiewicz, Arthur; report, Carole Nicksin contributed to this
Publication:HFN The Weekly Newspaper for the Home Furnishing Network
Date:Oct 8, 2001
Words:481
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