Bed Bath & Beyond Warns of Weak Profits, Same-Store Sales

Bed Bath & Beyond Inc. warned late Monday its Q1 2007 profits would be $0.36-0.38, missing analyst estimates of $0.40. It also guided same-store sales down to 1.6% growth over a year earlier, from a prior 3-5%. It will report full Q1 results on June 27. It said sales in the retail sector, particularly of home-related merchandise, have been challenging. Lowe's, second to Bed Bath & Beyond in U.S. home-improvement sales, lowered its 2007 earnings forecast in May and said its Q1 profits fell 12%. Jefferies' Timothy Allen: "We're to the point where the drag on housing activity is definitely going to have an impact." He added: "They're great operators, and they're doing everything within their control," including using 20%-off coupons to lure customers. Other analysts, however, expressed concern, noting the company rarely misses targets, and almost never issues warnings. CEO Steven Temares: "While we did not achieve all of our financial goals during our initial fiscal quarter of 2007, we remain optimistic that this year will be our best ever." Shares have traded in the $35-40 range for most of the past four years; they dropped 2.8% after-hours to $39.35 on the warning.

Sources: Press release, Bloomberg, Reuters, 24/7 Wall Street
Commentary: Bed Bath & Beyond's Q1 Miss: Warning of Bigger Retail Problems? • Irrational Market Reactions: Jos. A Bank Clothiers, Bed Bath & Beyond • Bed, Bath & Growth
Stocks/ETFs to watch: Bed Bath & Beyond Inc. (BBBY), Lowe's Companies Inc. (LOW). Competitors: Target Corp. (TGT), Wal-Mart Stores Inc. (WMT), The Home Depot Inc. (HD). ETFs: Retail HOLDRS ETF (RTH), PowerShares Consumer Services ETF (PRFS), Consumer Discretionary SPDR ETF (XLY)
Conference call transcript: Bed Bath & Beyond F4Q06

Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.