Bed Bath and Beyond 4Q14 Earnings Call Notes

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Results were good until latter part of February when weather worsened

“our actual results for the fourth quarter remained well within the range of our model for sales and comparable sales until the latter part of February, when the adverse weather conditions worsened in many parts of the United States.”

Impacted by port but were able to mitigate

“Similar to other retailers, we were also impacted by the prolonged West Coast port slowdown. However, the negative effect on our fiscal fourth quarter sales was minimized as we were able to divert shipments to other ports, albeit at some additional cost. Regardless of the unpredictability of the weather and the West Coast port slowdown, the quarter was a good one.”

Shared service corporate structure is a competitive advantage

“Supporting this is our shared services model, which has been the bedrock of Bed Bath & Beyond’s organizational structure since we made our first acquisition in 2002. The knowledge and best practices afforded us by our shared services model ultimately allows us to most efficiently drive a better and more robust customer experience.

By leveraging our corporate infrastructure through many functional areas where appropriate, we are able to significantly optimize efficiencies and profitability across our company. The capital investments we make in one area of our business can then be leveraged across all our concepts.’

Customers start online purchase in store

“We know that many of our customers start their shopping experience with us online or through a mobile device to research an item, read customer reviews, or compare pricing. The experience does not stop there, as many of these customers visit our stores and interact with one or more of our 60,000 associates to find what they need or to ask questions.”‘

When you’re customer centric, you take a leadership position

“We have been leveraging our stores for fulfillment with our decentralized culture since we launched our online capabilities in 1999 and, as I said, continue to evolve them. Bed Bath & Beyond has been operating as an omnichannel retailer long before it became the norm. When you are customer centric, these services are a natural extension of what you do to satisfy the customer.”

Expanding in Canada and Mexico

“Internationally, we have continued our expansion in Canada and Mexico. As I mentioned, our first buybuy BABY store opened in Edmonton this past December, and we look forward to the opportunity to grow our baby offerings throughout Canada.”

Gross margin down thanks to promotions and shipping expense

“Gross profit for the fiscal fourth quarter was approximately 39.7% of net sales, compared to approximately 40.5% of net sales in the corresponding period a year ago. The primary factor contributing to this decrease was an increase in coupon expense due to an increase in redemptions, partially offset by a slight decrease in the average coupon amount.

Also contributing to this decrease are increases in net direct to customer shipping expense, markdowns, and shrink. As a reminder, the one-year anniversary of’s $49 free shipping threshold was in February 2015.”

Expecting 2-3% comp sales growth in 2015

“We are modeling a 2% to 3% increase for comparable sales for both the first quarter and full year 2015 and that net sales will exceed the comp sales percentage increase by approximately 70 basis points in the first quarter and by approximately 90 basis points for the year.”