[ACCESSWIRE]
LONDON, UK / ACCESSWIRE / September 23, 2016 / Active Wall St. announces its post-earnings coverage on Bed Bath & Beyond Inc. (NASDAQ: BBBY). The company released its second quarter fiscal 2017 (Q2 FY16) earnings on September 21, 2016. The Union, New Jersey-based company reported a 1.2% y-o-y decline in its comparable sales and 0.2% y-o-y fall in its net sales. Register with us now for your free membership at: http://www.activewallst.com/register/.
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Earnings Reviewed
During the reported quarter, Bed Bath & Beyond reported net sales of $2.99 billion compared to $3.00 billion in Q2 FY15. Net sales number for Q2 FY16 missed market expectations of $3.05 billion. The fall in net sales is primarily due to a decline in comp sales and partially offset by growth in non-comp sales from new stores and One Kings Lane.
The company's net earnings for Q2 FY came in at $167.34 million, or $1.11 per diluted share, versus net earnings of $201.68 million, or $1.21 per diluted share, in the prior year's comparable quarter. For Q2 FY16, the market had expected net earnings of $1.16 per diluted share.
Steven Temares, CEO of Bed Bath & Beyond, said during earning call:
"We remained on course this quarter as we continued to strategically navigate the ever evolving retail landscape. We remain focused on our customers and what we need to do to earn still more relevancy and to become their destination as the experts for the home and their accompanying life stages and life interests."
In the quarter ended August 27, 2016, the company inaugurated six new stores, which included three Bed Bath & Beyond stores, two buybuy BABY stores and one Cost Plus World Market Store.
Operating Metrics
The company's Q2 FY16 comparable sales fell 1.2% on y-o-y basis compared to a positive comparative sales growth of 0.7% in the year ago quarter. The decline in comparable sales is attributed to a fall in the number of transactions and was offset by an increase in the average transaction amount. The comparable sales in digital channels grew more than 20% y-o-y; while comparable store sales declined in the lower single digit percentage in Q2 FY16.
The merchandise retail stores' gross margin was 37.4% of net sales in Q2 FY16 as compared to 38.1% of net sales in the year-ago quarter. The company attribute the drop in gross margin to a decline in merchandise margin and an increase in coupon expense, partially offset by a marginal fall in the average coupon amount.
Balance Sheet
As on August 27, 2016, the company had $577.84 million in cash and cash equivalents compared to a balance of $667.56 million as on August 29, 2015. At the end of the quarter, retail inventories increased 1% y-o-y to approximately $2.90 billion of cost. Additionally, the company reported long-term debt of $1.49 billion in its books of accounts as on August 27, 2016.
Share Repurchases and Dividends
Under its existing $2.5 billion share repurchase program, Bed Bath & Beyond repurchased 2.7 million shares of its common stock for a total of $121 million during the reported quarter. The company has a balance of approximately $2.0 billion under its said share repurchase program as of August 27, 2016, which is expected to be completed in the second half of fiscal 2019 or in fiscal 2020.
Bed Bath & Beyond has announced a quarterly dividend of $.125 per share which will be paid on January 17, 2017, to all the shareholders registered on records as of the close of business on December 16, 2016.
Earnings Outlook
Bed Bath & Beyond reiterated its full year fiscal 2016 net earnings per diluted share and expects it to be within previously announced range of $4.50 per share to just over $5.00 per share. The company's management expects capital expenditure to reach a peak in FY16 and is forecasted to be in the range of $400 million to $425 million.
Stock Performance
On Thursday, September 22, 2016, Bed Bath & Beyond's shares was slightly up 0.74%, finishing the day at $43.43 with trading volume of 4.97 million shares exchanging hands by the close of the trading session. Volume for the day was above the 3-month average volume of 2.43 million shares. Shares of the company have a PE ratio of 5.67 and a dividend yield of 1.15%.
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