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REPORT RATES BED BATH AMONG BEST INVESTMENTS.

NEW YORK-Low store overlap with Linens 'n Things, stronger sales in the home goods segment and growing square footage, along with an improved supply chain, puts Bed Bath & Beyond in the "best of class" category of investment ideas, said Deutsche Banc Alex. Brown analyst Dan Wewer.

In a 40-plus-page report last week, Wewer said the specialty retailer's fourth-quarter performance reflects strength in the home furnishings segment. The retailer's fourth-quarter comparable-store sales came in at 11.9 percent, "considerably ahead of our 4 percent forecast," Wewer said, adding that the entire segment has benefited from improved unemployment rates as well as a consumer spending shift from apparel to home goods.

More impressive is the retailer's market position. Wewer's real estate analysis between Bed Bath & Beyond and Linens 'n Things revealed that the overlap is 39 percent, "significantly less than expected. However, unlike the home centers, the home goods sector competes against other retail channels like department stores and mass merchants," Wewer said.

Still, the small overlap between Bed Bath & Beyond and Linens 'n Things is enough to make Wewer "bullish for the home goods sector" while confirming his view that "growth opportunities are abundant for the specialists."

Wewer contends Bed Bath & Beyond and Linens 'n Things are poised to double their store presence in the United States. He also predicted improvements made to Bed Bath & Beyond's supply chain will begin to pay off handsomely for the company during the next two years.

The analyst added that he was intrigued by the retailer's acquisition of Harmon Stores last month. It's the retailer's first acquisition and should have no impact on results this year.

"We believe the benefits of the deal could be more strategic than financial," Wewer said. He has Bed Bath & Beyond pegged with a "Buy" rating target price of $38.
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Comment:REPORT RATES BED BATH AMONG BEST INVESTMENTS.
Author:Zaczkiewicz, Arthur
Publication:HFN The Weekly Newspaper for the Home Furnishing Network
Article Type:Brief Article
Geographic Code:1USA
Date:Apr 15, 2002
Words:300
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