Bed Bath & Beyond Earnings Preview

Bed Bath & Beyond Inc. reports earnings for the fiscal second quarter on Wednesday after the market close. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: The company operates 819 stores nationwide under the names Bed Bath & Beyond, Christmas Tree Shops and Harmon selling home furnishings, food, gifts and health and beauty care products.

Consumers are being squeezed by rising interest rates, the slowing housing market and higher fuel prices. Rising energy costs have also lifted utilities costs, hurting some companies’ bottom line. Furniture sales have been weak in recent weeks, as people cut back on big-ticket items amid the slowing housing market. However, analysts see Bed Bath & Beyond as a savvier merchandiser and better equipped financially to handle economic pressures, compared with Pier 1 Imports Inc. and other rival chains.

BY THE NUMBERS: Wall Street expects earnings of 51 cents per share, the mean estimate of 24 analysts surveyed by Thomson Financial, on $1.60 billion in sales. The company didn’t provide any financial forecast in its last earnings release in June.

ANALYST TAKE: “Given the company’s historical top-line immunity to furniture sales fluctuations and housing turnover, we remain confident that planned 3 percent to 5 percent (same-store sales increases) are achievable,” Goldman Sachs analyst Adrianne Shapira wrote in a client note. Selling, general and administrative costs could pose some risk, “but our gross margin assumptions should prove conservative.” Shapira forecast quarterly earnings of 52 cents per share, which she said was a penny higher than management’s guidance.

STOCK PERFORMANCE: Bed Bath & Beyond shares recently traded at $37.52 on the New York Stock Exchange. They are up about 2 percent over the quarter.

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