BBBY’s Planning Assumptions

Bed Bath & Beyond ($BBBY) said they see first first-quarter earnings ranging between 92 and 96 cents per share. Furthermore, they project earnings for the entire year to rise by “mid single digits.” That’s based on several planning assumptions which they laid out in their conference call. Here’s a summary (this is edited down from the transcript via Seeking Alpha):

1. Q1 comparable stores sales growth of 1% to 2.5%. For the full year growth of approximately 3%.

2. Consolidated net sales growth of 2% to 3.5% for the first quarter and approximately 4% for the full year.

3. Depreciation for fiscal 2014 is expected to be approximately $240 million.

4. Assuming these sales levels, we are modeling deleverage for both gross profit and SG&A for the fiscal first quarter and full year. Contributing to the modeled gross profit deleverage on an assumed continuation and the shift of the mix of merchandise sold to lower margin categories and an increase in coupon expense. The modeled SG&A deleverage includes increases in technology expense and depreciation related to our ongoing investments.

5. Our annual interest line will include approximately $9.2 million in interest expense, substantially resulting from the inclusion of sale lease backed obligations related to certain distribution centers.

6. The first quarter and full year tax provisions are estimated to be in the mid to high 30s percentage range with expected variability as distinct tax events occur.

7. We expect to generate positive operating cash flow and to continue to fund operations entirely from internally generated sources.

8. We plan to continue to repurchase shares under our $2.5 billion repurchase program, which we estimate to be completed during fiscal 2015. However, this repurchase program may be influenced by several factors including business and market conditions.

9. We anticipate opening approximately 30 new stores companywide.

10. We expect to continue our program of renovating or repositioning stores within markets when appropriate.

11. Capital expenditures are planned to be approximately $350 million, which remain subject to the timing and composition of projects. Projected capital expenditures include the significant level of investment we will be making in our initiatives and primarily include the addition of new functionality to our selling websites, mobile sites and apps; development work necessary for a new and more robust point-of-sale system; deploying systems and equipment to our stores; equipping our new IT data center; opening an additional distribution facility for direct-to-customer and store fulfillment as well as new stores and existing store refurbishments.

The company is financially strong. BBBY has a cash balance of $943 million and shareholder equity is $3.9 billion.

Posted by on April 10th, 2014 at 8:48 am


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