No doubt that digital is transforming retail

“There is no doubt that digital technology is transforming retail and the way customers shop. For example, customers may now start their shopping experience with us online or through a mobile device to research an item, read customer reviews or compare price. Then they may go on to visit a store and interact with one of our associates before placing an order online or purchasing the item in the store. The evolution of omnichannel retailing has created a more seamless and personalized shopping experience for customers.”

Working on more flexible fulfillment options

“To further support our mission to just take care of our customers, we are creating more flexible fulfillment options that will allow us to deliver orders more quickly and cost effectively. During the first quarter, we opened our newest Las Vegas facility and we are assessing additional sites throughout the country to gain even greater distribution efficiencies. As you know, we already have the capability to ship for most of our stores.”

Physical stores remain integral to our success

“As the digital world and physical stores converge, the physical stores remain integral to our success. Integrated properly, we have a unique opportunity to engage with our customers in new ways and develop deeper customer relationships. In addition to our merchandising efforts, we want to give our customers more reason to spend time in our stores. We want to encourage product discovery, create an experiential shopping environment and enhance the services we offer.”

Expecting flat to slightly higher earnings in 2015

“Based on these and other planning assumptions, we are modeling net earnings per diluted share to be in the range of $1.18 to $1.23 in the second quarter as compared to $1.17 in 2014. For the full year, we are continuing to model net earnings per diluted share to be between relatively flat and a mid-single digit percentage increase as compared to 2014.”

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 bedbathandbeyond.com’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.”

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Core principles

“At the same time beneath all this, are our original core principles, take care of the customer and never be satisfied that you’re doing it well enough, because can always do it better.
“

Issuing debt, buying back stock

“I would like to take this opportunity to express how pleased we are to have completed initial offering of $1.5 billion of senior unsecured notes implemented at $250 million revolving credit agreement, received approval from our Board of Directors for an additional $2 billion share repurchase program, and entered into a $1.1 billion accelerated share repurchase agreement.
“

“Turning to the balance sheet, during the second-quarter we received $1.5 billion from the notes offering of which $1.1 billion was subsequently used to fund our accelerated share repurchase program, which commenced during the second-quarter, and is expected to be completed before the end of the calendar year.“

Comps +3.4%

“Second-quarter comparable sales increased by approximately 3.4% compared with an increase of 3.7% last year. This comparable sales increase is attributed to increases in both the average transaction amount and the number of transactions.“

Gross margins fell by 100bps due to promotions and shipping costs

“This decrease in the gross profit margin as a percentage of net sales in order of magnitude was primarily attributed to first, an increase in coupon expense resulting from an increase in redemptions and a slight increase in the average coupon amount, and second, an increase in net direct-to-customer shipping expense which was impacted by change in bedbathandbeyond.com’s free shipping threshold.
“

Growing its institutional business

“ we are growing our role in a complementary and highly fragmented institutional business with the potential to leverage our existing vendor base to provide products and services to institutional customers in hospitality, travel and other businesses.
“

They don’t do Q&A on the conference call, but take it off line

“As always we look forward to answering your questions and appreciate the opportunity to speak with you this evening. Ken, Franklin and I will be in our offices and we will ensure that all the calls we receive will be returned tonight. If you have questions, we encourage you to call and we will get back to you. As always, we appreciate your interest in Bed Bath & Beyond.
“

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings.

Overall environment challenging

“While the overall retail environment has been challenging, we believe we are making the necessary investments for our company’s long term success.”

42.7m sqft, 1% growth

“On May 31, 2014, consolidated store space net of openings and closings for all our concepts was approximately 42.7 million square feet, an increase of approximately 1.2% over the end of last year’s first quarter.”

1500 stores

” we currently offer 1,504 stores, consisting of 1,016 Bed Bath & Beyond stores in all 50 states, the District of Columbia, Puerto Rico, and Canada; 268 stores under the names World Market, Cost Plus World Market, or Cost Plus; 92 buybuy BABY stores; 78 stores under the names Christmas Tree Shops, Christmas Tree Shops andThat!, or andThat!; and 50 stores under the names Harmon or Harmon Face Values.”

Can get to 1300 bed bath locations

“We believe that throughout the United States and Canada there is an opportunity to operate in excess of 1,300 Bed Bath & Beyond stores”

GM contraction due to increase coupon expense, free shipping and mix

“Gross profit for the fiscal first quarter was approximately 38.8% of net sales compared to approximately 39.5% of net sales in the corresponding period a year ago. This decrease in the gross profit margin as a percentage of net sales was primarily attributed to an increase in coupon expense resulting from an increase in redemptions and a slight increase in the average coupon amount; an increase in net direct to customer shipping expense, which was impacted by our free shipping threshold; as well as a shift in the mix of merchandise sold to lower-margin categories.”

Modelling lower GM for remainder of year on continuation of headwinds

“we are modeling deleverage for both gross profit and SG&A for the fiscal second quarter and full year. Contributing to the modeled gross profit deleverage are an assumed continuation in the shift of the mix of merchandise sold to lower-margin categories, an increase in coupon expense, and an increase in net direct to customer shipping expense.”

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“we currently operate 1,474 stores, consisting of 1,006 Bed Bath & Beyond stores…264 World Market stores; 83 buybuy BABY stores; 74 stores under the names Christmas Tree Shops or andThat!; and 47 stores under the names Harmon or Harmon Face Values…During fiscal 2013, including the 3 stores opened to date, we anticipate opening approximately 45 stores across all of our concepts”

“We believe that throughout the United States and Canada, there is an opportunity to operate an excess of 1,300 Bed Bath & Beyond stores”

“Looking back on 2012, we are pleased with the progress we have made in many areas….relocation of our buying offices from New York to our headquarters in Union, New Jersey…completed 2 acquisitions…made significant progress toward creating an enhanced omni-channel experience for our customers and have taken substantial steps in replacing both back-end and customer-facing systems…opened a new Internet fulfillment center in Georgia to support our growing online business…commenced the initial phase of a new IT Data Center to enhance our disaster recover capabilities and support our overall IT systems.”