Bed Bath and Beyond 2Q14 Earnings Call Notes

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.”