Bed Bath and Beyond FY 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. 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’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.