Bed Bath buys $1 billion of its own stock

A massive share repurchase program at Bed Bath & Beyond enabled the company to overcome increased expenses and a decline in gross margins to produce earning per share growth that exceeded analysts’ estimates.



The company’s sales for the quarter ended August 30 increased 4.3% to $2.945 billion and same store sales increased 3.4%. However, the nation’s leading specialty retailer of home good paid a price for the top line growth as gross margins declined to 38.5% from 39.4% the prior year while expenses increased 5.7%. As a result, operating profits declined 5.4% to $368.7 million from $389.8 million and net income fell 10.1% to $223.9 million from $249.3 million.



Bed Bath & Beyond offset the drop in profits with a massive share repurchase program which enabled it to grow earnings per share by a penny to $1.17 and exceed by three cents analysts’ consensus estimate for the widely followed company. The earnings beat was made possible by the company’s decision to spend roughly $1 billion in the second quarter to buy back 16.9 million shares. That resulted in a nearly 11% reduction in the number of shares outstanding at the end of the second quarter compared to the second quarter the prior year.



The company ended the second quarter with 1,506 stores, including 1,017 Bed Bath & Beyond stores and 269 stores under the banners of World Market, Cost Plus World Market and Cost Plus. Other formats include 92 buybuy Baby stores, 78 Christmas Tree Shops, Christmas Trees Shops and That! and 50 stores under the Harmon and Harmon Face Values banners.