Bed Bath & Beyond earnings beat estimates, shares up

Home goods retailer Bed Bath & Beyond Inc. (Nasdaq:BBBY - news) on Wednesday reported a 9 percent rise in quarterly earnings, beating expectations, as more promotions brought in strong holiday sales.

The company also gave a full-year forecast that exceeded analysts’ estimates and its stock rose more than 5 percent in after-hours trading.

Net income for the fourth quarter ended February 25 rose to $197.9 million, or 67 cents per share, from $181 million, or 59 cents per share, a year ago.

Wall Street analysts, on average, had expected the company to report earnings of 65 cents per share, according to Reuters Estimates. Bed Bath & Beyond in December forecast fourth-quarter earnings of 64 cents a share.

Sales for the quarter rose 14.8 percent to $1.69 billion, above analysts’ expectations of $1.637 billion, according to Reuters Estimates.

Sales at stores open at least a year, a key retail measure known as same-store sales, rose 6.3 percent.

Wedbush Morgan analyst Joan Storms said more promotional activity during the holiday season had helped Bed Bath & Beyond post its biggest same-store sales increase in seven quarters.

“They did a very good job in a challenging Christmas,” Storms said. “They couponed (discounted) some more, which might have cost them a bit more on the margin, but drove some nice sales.” Storms has a buy rating on the stock.

Home furnishings retailers have faced intense price competition from discounters like Target Corp. (NYSE:TGT - news) and Wal-Mart Stores Inc. (NYSE:WMT - news), but Bed Bath & Beyond has been able to flourish as its higher-quality merchandise like cutlery and linens has appealed to higher-income consumers.

In December, Bed Bath & Beyond said it was experiencing stiff price competition in the holiday shopping season and was trying to remain “relatively restrained” with its promotions.

For the full year ending in February, Bed Bath & Beyond expects earnings to rise 13 percent to about $2.17 per share. Analysts were expecting earnings of $2.14 per share, according to Reuters Estimates.

The company forecast earnings of 35 cents per share for the first-quarter and a profit of 51 cents a share for the second quarter, in line with analysts’ estimates.

In addition, on a conference call with analysts, Co-Chairman Leonard Feinstein said the home goods retailer expects to one day have 1,300 of its flagship stores in the United States. He did not give a specific timeline.

The retailer currently has 746 Bed Bath & Beyond stores in the United States and Puerto Rico. It also operates the Christmas Tree Shops and Harmon Stores brands.

Bed Bath & Beyond shares were up $2.32, or 6.1 percent, at $40.64 on the Inet electronic brokerage. The stock finished regular trading at $38.32 on Nasdaq.