Bed Bath & Beyond rewards investors in new ways

Bed Bath & Beyond has entered a new phase in its growth trajectory, becoming more aggressive in returning cash to shareholders and initiating a quarterly dividend as opposed to fueling top-line growth with rapid store expansion.



The Bed Bath & Beyond retail footprint will be largely unchanged in 2016 with plans calling for the addition of 30 new stores and the closing of 15 stores on a base of roughly 1,500 units. However, the company plans to begin paying a quarterly dividend of 12.5 cents to shareholders of record on June 17, a move undertaken to “provide a more balanced approach to returning value to shareholders.” The dividend is reflective of the company’s strong cash flow and confidence in the business, according to a statement made in conjunction with the release of fourth quarter and full year results for the period ended Feb. 27.



"We are pleased to have completed another successful year," said Steven H. Temares, CEO of Bed Bath & Beyond. "Our fiscal 2015 financial performance reflects the benefit of the significant investments in our business, steady progress on our strategic initiatives, and the return of more than $1.1 billion to our shareholders through share repurchase."



During the fourth quarter, the company spent $327 million to buy back roughly seven million shares. The company exhausted an existing $2 billion share repurchase program and began repurchasing shares under a new $2.5 billion program authorized last fall, of which $2.3 billion remains.



The more aggressive pace of returning cash to shareholders comes as Bed Bath & Beyond’s sales and earnings growth has moderated from what were very high levels. Sales in the fourth quarter increased 2.4% to $3.4 billion and same-store sales increased 1.7%, driven entirely by e-commerce growth, compared to a comp increased during the fourth quarter the prior year of 3.7%. Without the negative effect of the stronger U.S. dollar, fourth quarter sales increased 2.8% and same-store sales increased 2.1%.



Fourth quarter net income actually declined to $303.5 million from $321 million, but the high volume of share repurchase activity so reduced the number of outstanding shares over which those profits were spread that earnings per share increased to $1.91 from $1.80. The fourth quarter earnings figure also benefitted from a one-time six cent a share tax matter.



A similar effect was evident in the company’s full year results, which saw net income decline to $841.5 million from $957.5 million while earnings per share increased to $5.10 from $5.07.



Total sales increased 1.9% to $12.1 billion and same-store sales increased 1%, compared to a prior year increase of 2.4%. On a constant currency basis sales increased 2.4% and same-store sales increased 1.4%



The company ended the year with a total of 1,530 stores, including 1,020 Bed Bath & Beyond stores in all 50 states, the District of Columbia, Puerto Rico and Canada, 276 stores under the names of World Market, Cost Plus World Market or Cost Plus, 105 buybuy BABY stores, 78 stores under the names Christmas Tree Shops, Christmas Tree Shops andThat! or andThat!, and 51 stores under the names Harmon or Harmon Face Values.