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Bed Bath & Beyond Inc. has a market cap of $14.37 billion; its shares were traded at around $62.36 with a P/E ratio of 14.5 and P/S ratio of 1.5. Bed Bath & Beyond Inc. had an annual average earning growth of 14.3% over the past 10 years. GuruFocus rated Bed Bath & Beyond Inc. the business predictability rank of 4.5-star.
Highlight of Business Operations:As of May 26, 2012 and February 25, 2012, the Company’s available-for-sale investment securities represented approximately $77.4 million and approximately $83.9 million par value of auction rate securities, respectively, less temporary valuation adjustments of approximately $3.1 million and $3.7 million, respectively. Since these valuation adjustments are deemed to be temporary, they are recorded in accumulated other comprehensive loss, net of a related tax benefit, and did not affect the Company’s net earnings. These securities at par are invested in preferred shares of closed end municipal bond funds, which are required, pursuant to the Investment Company Act of 1940, to maintain minimum asset coverage ratios of 200%. All of these available-for-sale investments carried triple-A credit ratings from one or more of the major credit rating agencies as of May 26, 2012 and February 25, 2012, and none of them are mortgage-backed debt obligations. As of May 26, 2012 and February 25, 2012, the Company’s available-for-sale investments have been in a continuous unrealized loss position for 12 months or more, however, the Company believes that the unrealized losses are temporary and reflect the investments’ current lack of liquidity. Due to their lack of liquidity, the Company classified approximately $72.2 million and $73.7 million of these investments as long term investment securities at May 26, 2012 and February 25, 2012, respectively. During the three months ended May 26, 2012, approximately $6.5 million of these securities were redeemed at par. Subsequent to the end of the first quarter of fiscal 2012 through June 22, 2012, the Company redeemed approximately $2.1 million of short term available-for-sale securities at par.
· For the three months ended May 26, 2012, net earnings per diluted share were $0.89 ($206.8 million), an increase of approximately 24%, as compared with net earnings per diluted share of $0.72 ($180.6 million) for the three months ended May 28, 2011. The increase in net earnings per diluted share for the three months ended May 26, 2012 is the result of the items described above, as well as the impact of the Company’s repurchases of its common stock.
Net sales for the three months ended May 26, 2012 were $2.218 billion, an increase of $108.3 million or approximately 5.1% over net sales of $2.110 billion for the corresponding quarter last year. For the three months ended May 26, 2012, approximately 57.8% of the increase in net sales was attributable to the increase in comparable store sales and the balance of the increase was primarily attributable to an increase in the Company’s new store sales.
Sales of domestics merchandise and home furnishings for the Company accounted for approximately 40% and 60% of net sales, respectively, for the three months ended May 26, 2012 and approximately 41% and 59% of net sales, respectively, for the three months ended May 28, 2011.
SG&A for the three months ended May 26, 2012 was $573.8 million, or 25.9% of net sales, compared with $568.6 million, or 26.9% of net sales, for the three months ended May 28, 2011. The decrease in SG&A as a percentage of net sales for the three months ended May 26, 2012 was primarily due to relative decreases in payroll and payroll-related items (including salaries and workers’ compensation insurance) and occupancy expenses (including rent and utilities), both of which benefited from the increases in comparable store sales for the three months ended May 26, 2012.
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