Bed Bath & Beyond Inc. Reports Results For Fiscal 2017 Fourth Quarter (14 Weeks) And Full Year (53 Weeks)

|PR Newswire|About: BBBY

- Q4 Net Earnings Per Diluted Share of $1.41; Excluding Net Impact of Tax Act, $1.48

- Q4 Net Sales Increased Approximately 5.2%; Comparable Sales Declined 0.6%

- Board of Directors Declares Increase in Quarterly Dividend to $0.16 Per Share

PR Newswire

UNION, N.J., April 11, 2018 /PRNewswire/ -- Bed Bath & Beyond Inc. (BYSI) (NASDAQ: BBBY) today reported financial results for the fiscal fourth quarter (14 weeks) and full year (53 weeks) ended March 3, 2018.

Fiscal 2017 Fourth Quarter Results

For the fiscal 2017 fourth quarter (14 weeks), the Company reported net earnings of $1.41 per diluted share ($194.0 million), which included a net unfavorable $10.5 million tax expense related to the Tax Cuts and Jobs Act of 2017 (the Tax Act).  Excluding the net unfavorable impact from the Tax Act, net earnings per diluted share in the fiscal 2017 fourth quarter would have been $1.48.  Net earnings for the fiscal 2016 fourth quarter (13 weeks) were $1.84 per diluted share ($268.7 million).

Net sales for the fiscal 2017 fourth quarter (14 weeks) were approximately $3.7 billion, an increase of approximately 5.2% from the prior year quarter (13 weeks).  Comparable sales in the fiscal 2017 fourth quarter (14 weeks) decreased by approximately 0.6%, and included strong sales growth from the Company's customer-facing digital channels, and sales from stores that declined in the mid-single-digit percentage range.

Fiscal 2017 Full Year Results

For the fiscal full year (53 weeks), the Company reported net earnings of $3.04 per diluted share ($424.9 million), which included a net unfavorable $10.5 million tax expense related to the Tax Act, compared with $4.58 per diluted share ($685.1 million) in the corresponding period a year ago (52 weeks).  Excluding the net unfavorable impact from the Tax Act, net earnings per diluted share in fiscal 2017 would have been $3.12.

Net sales for fiscal 2017 (53 weeks) were approximately $12.3 billion, an increase of approximately 1.1% compared with fiscal 2016 (52 weeks).  Comparable sales for the fiscal 2017 full year (53 weeks) decreased by approximately 1.3%, and included strong sales growth from the Company's customer-facing digital channels, and sales from stores that declined in the mid-single-digit percentage range.

Capital Allocation

As a reflection of the long-term health of the business, and commitment to creating shareholder value, the Company's Board of Directors today declared an increase in the quarterly dividend to $0.16 per share.  The increased quarterly dividend is payable on July 17, 2018 to shareholders of record at the close of business on June 15, 2018.

During the fiscal 2017 fourth quarter, the Company repurchased approximately $45 million of its common stock, representing approximately 2 million shares, under its existing $2.5 billion share repurchase program.  As of March 3, 2018, the program had a remaining balance of approximately $1.5 billion.

The Company ended fiscal 2017 with $744 million in cash and investment balances, an increase of approximately $166 million, compared with approximately $578 million in fiscal 2016.

Outlook

Bed Bath & Beyond Inc.'s conference call with analysts and investors will be held today at 5:00 pm EDT.  During this call, the Company plans to review certain of its financial planning assumptions for fiscal 2018, which is a 52-week year.

Based upon its planning assumptions for fiscal 2018, as will be described in the conference call, the Company is modeling net earnings per diluted share for the full year to be in the low-to-mid $2.00 range. 

During the conference call, the Company will also outline its roadmap for continuing the evolution of its foundational structure to support its mission to be trusted by its customers as the expert for the home and heart-felt life events, with the following goals: growing its comparable sales, which it expects to begin in fiscal 2018; moderating the declines in its operating profit and net earnings per diluted share, in fiscal 2018 and fiscal 2019; and growing its net earnings per diluted share by fiscal 2020.

Fiscal 2017 Fourth Quarter Conference Call

Bed Bath & Beyond Inc.'s fiscal 2017 fourth quarter conference call may be accessed by dialing 1-800-446-1671, or if international, 1-847-413-3362, using conference ID number 46495820. The replay of the call can be accessed by dialing 1-888-843-7419, using conference ID number 46495820.  The call and replay can also be accessed via audio webcast on the investor relations section of our website at www.bedbathandbeyond.com.

About the Company

Bed Bath & Beyond Inc. (BBBY) and subsidiaries (the "Company") is an omnichannel retailer selling a wide assortment of domestics merchandise and home furnishings which operates under the names Bed Bath & Beyond, Christmas Tree Shops, Christmas Tree Shops andThat! or andThat!, Harmon, Harmon Face Values or Face Values, buybuy BABY and World Market, Cost Plus World Market or Cost Plus. Customers can purchase products either in-store, online, with a mobile device or through a customer contact center. The Company generally has the ability to have customer purchases picked up in-store or shipped direct to the customer from the Company's distribution facilities, stores or vendors. In addition, the Company operates Of a Kind, an e-commerce website that features specially commissioned, limited edition items from emerging fashion and home designers; One Kings Lane (KINGS), an authority in home décor and design, offering a unique collection of select home goods, designer and vintage items; PersonalizationMall.com, an industry-leading online retailer of personalized products; Chef Central, an online retailer of kitchenware, cookware and homeware items catering to cooking and baking enthusiasts; and Decorist, an online interior design platform that provides personalized home design services. The Company also operates Linen Holdings, a provider of a variety of textile products, amenities and other goods to institutional customers in the hospitality, cruise line, healthcare and other industries. Additionally, the Company is a partner in a joint venture which operates retail stores in Mexico under the name Bed Bath & Beyond.

The Company operates websites at bedbathandbeyond.com, bedbathandbeyond.ca, worldmarket.com, buybuybaby.com, buybuybaby.ca, christmastreeshops.com, andthat.com, harmondiscount.com, facevalues.com, ofakind.com, onekingslane.com, personalizationmall.com, chefcentral.com, decorist.com, harborlinen.com, and t-ygroup.com.  As of March 3, 2018, the Company had a total of 1,552 stores, including 1,017 Bed Bath & Beyond stores in all 50 states, the District of Columbia, Puerto Rico and Canada, 276 stores under the names of World Market, Cost Plus World Market or Cost Plus, 119 buybuy BABY stores, 83 stores under the names Christmas Tree Shops, Christmas Tree Shops andThat! or andThat!, and 57 stores under the names Harmon, Harmon Face Values or Face Values.  During the fiscal fourth quarter, the Company opened one World Market store, and one buybuy BABY store, and closed three Bed Bath & Beyond stores and five World Market stores.  The joint venture, to which the Company is a partner, operates eight stores in Mexico under the name Bed Bath & Beyond.

Forward-Looking Statements

This press release may contain forward-looking statements.  Many of these forward-looking statements can be identified by use of words such as may, will, expect, anticipate, approximate, estimate, assume, continue, model, project, plan, goal, and similar words and phrases.  The Company's actual results and future financial condition may differ materially from those expressed in any such forward-looking statements as a result of many factors. Such factors include, without limitation: general economic conditions including the housing market, a challenging overall macroeconomic environment and related changes in the retailing environment; consumer preferences, spending habits and adoption of new technologies; demographics and other macroeconomic factors that may impact the level of spending for the types of merchandise sold by the Company; civil disturbances and terrorist acts; unusual weather patterns and natural disasters; competition from existing and potential competitors across all channels; pricing pressures; liquidity; the ability to achieve anticipated cost savings, and to not exceed anticipated costs, associated with organizational changes; the ability to attract and retain qualified employees in all areas of the organization; the cost of labor, merchandise and other costs and expenses; potential supply chain disruption due to trade restrictions, political instability, labor disturbances, product recalls, financial or operational instability of suppliers or carriers, and other items; the ability to find suitable locations at acceptable occupancy costs and other terms to support the Company's plans for new stores; the ability to establish and profitably maintain the appropriate mix of digital and physical presence in the markets it serves; the ability to assess and implement technologies in support of the Company's development of its omnichannel capabilities; uncertainty in financial markets; volatility in the price of the Company's common stock and its effect, and the effect of other factors, on the Company's capital allocation strategy; disruptions to the Company's information technology systems including but not limited to security breaches of systems protecting consumer and employee information; reputational risk arising from challenges to the Company's or a third party supplier's compliance with various laws, regulations or standards, including those related to labor, health, safety, privacy or the environment; reputational risk arising from third-party merchandise or service vendor performance in direct home delivery or assembly of product for customers; changes to statutory, regulatory and legal requirements, including without limitation proposed changes affecting international trade; changes to, or new, tax laws or interpretation of existing tax laws; new, or developments in existing, litigation, claims or assessments; changes to, or new, accounting standards; foreign currency exchange rate fluctuations; and the integration of acquired businesses.  The Company does not undertake any obligation to update its forward-looking statements.

 

 BED BATH & BEYOND INC. AND SUBSIDIARIES 

 Consolidated Statements of Earnings 

 (in thousands, except per share data) 

  (unaudited) 























 Three Months Ended 


Twelve Months Ended
























 March 3, 


 February 25, 


 March 3, 


 February 25, 







2018


2017


2018


2017


































Net sales


$

3,716,264


$

3,533,954


$

12,349,301


$

12,215,757




















Cost of sales



2,382,984



2,190,863



7,906,286



7,639,407






















Gross profit



1,333,280



1,343,091



4,443,015



4,576,350




















Selling, general and administrative expenses


996,177



913,163



3,681,694



3,441,140






















Operating profit



337,103



429,928



761,321



1,135,210




















Interest expense, net



16,294



16,787



65,661



69,555






















Earnings before provision for income taxes


320,809



413,141



695,660



1,065,655




















Provision for income taxes 


126,765



144,411



270,802



380,547






















Net earnings


$

194,044


$

268,730


$

424,858


$

685,108




















Net earnings per share - Basic

$

1.41


$

1.86


$

3.05


$

4.61



Net earnings per share - Diluted

$

1.41


$

1.84


$

3.04


$

4.58




















Weighted average shares outstanding - Basic


137,473



144,835



139,238



148,590



Weighted average shares outstanding - Diluted


137,950



145,981



139,739



149,708




















Dividends declared per share

$

0.150


$

0.125


$

0.600


$

0.500


 

 

BED BATH & BEYOND INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands, unaudited)


















March 3,


February 25,







2018


2017













Assets





















Current assets:











 Cash and cash equivalents



$

346,140


$

488,329



 Short term investment securities



378,039



-



 Merchandise inventories




2,730,874



2,905,660



 Prepaid expenses and other current assets



516,025



197,912














        Total current assets




3,971,078



3,591,901













Long term investment securities




19,517



89,592


Property and equipment, net




1,909,289



1,837,129


Goodwill





716,283



697,085


Other assets





424,639



606,948


















$

7,040,806


$

6,822,655













Liabilities and Shareholders' Equity



















Current liabilities:











Accounts payable



$

1,197,504


$

1,179,088



Accrued expenses and other current liabilities



633,100



484,114



Merchandise credit and gift card liabilities



335,081



309,478



Current income taxes payable



-



59,821














       Total current liabilities




2,165,685



2,032,501













Deferred rent and other liabilities




431,592



511,303


Income taxes payable




62,823



67,971


Long term debt





1,492,078



1,491,603














       Total liabilities




4,152,178



4,103,378













Shareholders' equity:










Preferred stock - $0.01 par value; authorized - 1,000








  shares; no shares issued or outstanding



-



-














Common stock - $0.01 par value; authorized - 900,000 shares;








  issued 341,795 and 339,533 shares, respectively;








  outstanding 140,498 and 146,274 shares, respectively


3,418



3,395



Additional paid-in capital




2,057,975



1,974,781



Retained earnings




11,343,503



11,003,890



Treasury (TSRMF) stock, at cost; 201,297 and 193,259 shares, respectively


(10,467,972)



(10,215,539)



Accumulated other comprehensive loss



(48,296)



(47,250)













Total shareholders' equity




2,888,628



2,719,277


















$

7,040,806


$

6,822,655














Certain reclassifications have been made to the Fiscal Year 2016 consolidated balance sheet to conform to the Fiscal Year 2017 consolidated balance sheet presentation.

 

 

BED BATH & BEYOND INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(in thousands, unaudited)






















 Twelve Months Ended 






















March 3, 


February 25,









2018


2017



























Cash Flows from Operating Activities:























Net earnings





$

424,858


$

685,108



Adjustments to reconcile net earnings to net cash










provided by operating activities:










Depreciation and amortization




313,107



290,914




Stock-based compensation




70,510



71,911




Deferred income taxes





175,351



24,878




Other






(69)



(1,032)




Decrease (increase) in assets, net of effect of acquisitions:









     Merchandise inventories




176,672



(38,493)




     Trading investment securities



(16,036)



(18,780)




     Other current assets




(258,853)



(18,464)




     Other assets





(4,754)



(14,480)




Increase (decrease) in liabilities, net of effect of acquisitions:









     Accounts payable





13,210



49,458




     Accrued expenses and other current liabilities



80,375



(8,586)




     Merchandise credit and gift card liabilities



25,510



11,390




     Income taxes payable




(64,941)



(8,307)




     Deferred rent and other liabilities



(75,251)



17,754
















Net cash provided by operating activities



859,689



1,043,271















Cash Flows from Investing Activities:























Purchase of held-to-maturity investment securities



(292,500)



-



Redemption of held-to-maturity investment securities



-



86,240



Capital expenditures 





(375,793)



(373,574)



Investment in unconsolidated joint venture



-



(3,318)



Payment for acquisitions, net of cash acquired



(6,119)



(201,277)
















Net cash used in investing activities




(674,412)



(491,929)















Cash Flows from Financing Activities:























Proceeds from exercise of stock options



10,313



20,424



Payment of other liabilities





(434)



-



Payment of dividends





(80,877)



(55,612)



Repurchase of common stock, including fees



(252,433)



(547,022)
















Net cash used in financing activities




(323,431)



(582,210)
















Effect of exchange rate changes on cash and cash equivalents


(4,035)



3,624
















Net decrease in cash and cash equivalents



(142,189)



(27,244)















Cash and cash equivalents:











Beginning of period 





488,329



515,573



End of period





$

346,140


$

488,329





























Certain reclassifications have been made to the Fiscal Year 2016 consolidated statement of cash flows to conform to the Fiscal Year 2017 consolidated cash flows presentation. 

 

 

Non-GAAP Financial Measures

The following information provides reconciliations of a non-GAAP financial measure presented in this press release.  The Company believes that this non-GAAP financial measure, Net Earnings Excluding Net Impact of Tax Act, provides meaningful supplemental information regarding the performance of the Company's business.  This non-GAAP financial measure should not be considered superior to, but in addition to other financial measures prepared in accordance with GAAP, including the year-to-year results.  The Company's method of determining this non-GAAP financial measure may be different from other companies' methods and, therefore, may not be comparable to those used by other companies and the Company does not recommend the sole use of this non-GAAP measure to assess its financial and earnings performance.

 


Fourth Quarter and Fiscal Year Reconciliation of Net Earnings

to Net Earnings Excluding Net Impact of Tax Act

(unaudited)

(in thousands, except per share data)



Fourteen Weeks Ended March 3, 2018








Net Earnings
(as reported)


Net Impact of
Tax Act (a)


Net Earnings Excluding
Net Impact of Tax Act 

Earnings before provision for income taxes

$320,809




$320,809

Provision for income taxes

$126,765


($10,546)


$116,219

Net earnings

$194,044


$10,546


$204,590

Net earnings per share - Diluted

$1.41


$0.07


$1.48













Fifty-Three Weeks Ended March 3, 2018








Net Earnings
(as reported)


Net Impact of
Tax Act (a)


Net Earnings Excluding
Net Impact of Tax Act 

Earnings before provision for income taxes

$695,660




$695,660

Provision for income taxes

$270,802


($10,546)


$260,256

Net earnings

$424,858


$10,546


$435,404

Net earnings per share - Diluted

$3.04


$0.08


$3.12







(a) The net impact of the Tax Act includes: (1) re-measurement of the Company's deferred tax assets that existed on December 22, 2017 (the enactment date of the Tax Act); (2) deferred taxes that were created after
December 22, 2017 that were deducted at the Federal statutory rate of 32.7%, but will reverse at the newly
enacted 21% Federal rate; (3) the transition tax on accumulated foreign earnings, and; (4) the decrease
in the Federal statutory rate for fiscal 2017.







 

 

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SOURCE Bed Bath & Beyond