Bed Bath & Beyond Inc
The beat really was on the expense line although they had good operating performance across the board, said Bernstein analyst Colin McGranahan, who has an outperform rating on the stock.
They have absolutely tightened the labor model up. I think they're reducing advertising costs, which had gone way up.
Net income for the fiscal first quarter ended May 30 rose to $87.17 million, or 34 cents per share, from $76.78 million, or 30 cents per share, a year earlier, Bed Bath & Beyond said on Wednesday .
Analysts, on average, were expecting earnings of 25 cents per share, according to Reuters Estimates, which would have meant a decline in profit compared with a year earlier.
Sales rose 2.8 percent to $1.69 billion as it opened more stores, but sales at stores open at least a year, a key retail measure known as same-store sales, fell 1.6 percent.
Selling, general and administrative expenses declined to $524.5 million in the quarter from $537.18 million a year earlier.
The company also said it expected its second-quarter earnings per share to rise to 42 cents, with fiscal 2009 earnings per share expected to be $1.59.
Capital expenditures are expected to be around $250 million for the 2009 fiscal year as Bed Bath & Beyond upgrades its information technology equipment, refurbishes old stores, and opens about 57 new stores.
Depreciation for the 2009 fiscal year is expected to be about $180 million. the company said.
We are confident that we will be able to look back at this period as one that afforded us an exceptional opportunity to gain market share and to improve our competitive position, company executive Steven Temares said during the company's quarterly conference call.
Bed Bath & Beyond and peers like Pier 1 Imports Inc
Bed Bath & Beyond has sought to battle the recessionary environment by cutting costs and scaling back expansion plans. In the first quarter, it opened six Bed Bath & Beyond stores, one Christmas Tree Shops store, and one buybuy Baby store. It also closed one Bed Bath & Beyond store.
McGranahan said the results show Bed Bath & Beyond has gained market share since former rival Linens 'n Things closed its doors after filing for bankruptcy protection last year.
The loss of a major competitor means that Bed Bath & Beyond no longer needs to distribute as many coupons as it did in the past to get shoppers into its stores, helping to lower expenses, the analyst said.
Shares rose 6.4 percent to $30.20 after closing at $28.39 on the Nasdaq.
(Reporting by Nicole Maestri, additional reporting by Ian Sherr; Editing by Gary Hill, Leslie Gevirtz)