Author Archive

  • Bed, Bath & Beyond’s Q3 Earnings
    , January 7th, 2009 at 4:20 pm

    For their third-quarter (ending November 29), Bed Bath & Beyond (BBBY) just reported earnings of 34 cents a share. That’s pretty ugly, but honestly, it’s not bad considering the crappy environment they’re in. The earnings were a penny below the Street’s consensus, and the company earned 52 cents a share for last year’s Q3. Sales came in at $1.783 billion which was slightly below last year’s Q3. Same-store sales were just ugly, down 5.6%.
    The company sees Q4 EPS coming in at 40 to 46 cents which is less than the 49 cents the Street was expecting.
    Here are the earnings results going back a few years:

    Quarter Sales Gross Profit Operating Profit Net Profit EPS
    May-99 $356,633 $146,214 $28,015 $17,883 $0.06
    Aug-99 $451,715 $185,570 $53,580 $33,247 $0.12
    Nov-99 $480,145 $196,784 $50,607 $31,707 $0.11
    Feb-00 $569,012 $238,233 $77,138 $48,392 $0.17
    May-00 $459,163 $187,293 $36,339 $23,364 $0.08
    Aug-00 $589,381 $241,284 $70,009 $43,578 $0.15
    Nov-00 $602,004 $246,080 $64,592 $40,665 $0.14
    Feb-01 $746,107 $311,802 $101,898 $64,315 $0.22
    May-01 $575,833 $234,959 $45,602 $30,007 $0.10
    Aug-01 $713,636 $291,342 $84,672 $53,954 $0.18
    Nov-01 $759,438 $311,030 $83,749 $52,964 $0.18
    Feb-02 $879,055 $370,235 $132,077 $82,674 $0.28
    May-02 $776,798 $318,362 $72,701 $46,299 $0.15
    Aug-02 $903,044 $370,335 $119,687 $75,459 $0.25
    Nov-02 $936,030 $386,224 $119,228 $75,112 $0.25
    Feb-03 $1,049,292 $443,626 $168,441 $105,309 $0.35
    May-03 $893,868 $367,180 $90,450 $57,508 $0.19
    Aug-03 $1,111,445 $459,145 $155,867 $97,208 $0.32
    Nov-03 $1,174,740 $486,987 $161,459 $100,506 $0.33
    Feb-04 $1,297,928 $563,352 $231,567 $144,248 $0.47
    May-04 $1,100,917 $456,774 $128,707 $82,049 $0.27
    Aug-04 $1,273,960 $530,829 $189,108 $120,008 $0.39
    Nov-04 $1,305,155 $548,152 $190,978 $121,927 $0.40
    Feb-05 $1,467,646 $650,546 $283,621 $180,980 $0.59
    May-05 $1,244,421 $520,781 $150,884 $98,903 $0.33
    Aug-05 $1,431,182 $601,784 $217,877 $141,402 $0.47
    Nov-05 $1,448,680 $615,363 $205,493 $134,620 $0.45
    Feb-06 $1,685,279 $747,820 $304,917 $197,922 $0.67
    May-06 $1,395,963 $590,098 $148,750 $100,431 $0.35
    Aug-06 $1,607,239 $678,249 $219,622 $145,535 $0.51
    Nov-06 $1,619,240 $704,073 $211,134 $142,436 $0.50
    Feb-07 $1,994,987 $862,982 $309,895 $205,842 $0.72
    May-07 $1,553,293 $646,109 $154,391 $104,647 $0.38
    Aug-07 $1,767,716 $732,158 $211,037 $147,008 $0.55
    Nov-07 $1,794,747 $747,866 $203,152 $138,232 $0.52
    Feb-08 $1,933,186 $799,098 $259,442 $172,921 $0.66
    May-08 $1,648,491 $656,000 $118,819 $76,777 $0.30
    Aug-08 $1,853,892 $739,321 $187,421 $119,268 $0.46
    Nov-08 $1,782,683 $692,857 $136,374 $87,700 $0.34

    Here’s their trailing four-quarter earnings-per-share. The two red lines show the upper and lower band of the company’s projection.
    image755.png
    It’s not hard to find the squeaky wheel. Take at look at their operating margins:
    image756.png
    That’s based on trailing four quarter numbers. This means the company is doing a lot of price-cutting.

  • The End of Times
    , January 7th, 2009 at 11:45 am

    Michael Hirschorn says the New York Times could go bankrupt, by May.

    It’s certainly plausible. Earnings reports released by the New York Times Company in October indicate that drastic measures will have to be taken over the next five months or the paper will default on some $400million in debt. With more than $1billion in debt already on the books, only $46million in cash reserves as of October, and no clear way to tap into the capital markets (the company’s debt was recently reduced to junk status), the paper’s future doesn’t look good.
    “As part of our analysis of our uses of cash, we are evaluating future financing arrangements,” the Times Company announced blandly in October, referring to the crunch it will face in May. “Based on the conversations we have had with lenders, we expect that we will be able to manage our debt and credit obligations as they mature.” This prompted Henry Blodget, whose Web site, Silicon Alley Insider, has offered the smartest ongoing analysis of the company’s travails, to write: “‘We expect that we will be able to manage’? Translation: There’s a possibility that we won’t be able to manage.”

  • Mean Automakers Dash Nation’s Hope For Flying Cars
    , January 6th, 2009 at 4:56 pm


    Mean Automakers Dash Nation’s Hope For Flying Cars

  • Earnings Preview: Bed Bath & Beyond
    , January 6th, 2009 at 1:20 pm

    From AP:

    Bed Bath & Beyond Inc. reports results for its fiscal third quarter on Wednesday. The following is a summary of key developments and analyst opinion related to the period.
    OVERVIEW: In early December, Bed Bath & Beyond pre-released results for the third quarter, saying same-store sales slipped amid a tough economic climate and liquidation sales by a major competitor.
    The Union, N.J.-based housewares retailer it expects earnings to range between 31 cents and 35 cents per share for the quarter ended Nov. 29. That’s down from previous guidance of 41 cents to 47 cents a share the company gave in September. It also represents a drop from 2007, when the company earned 52 cents a share in the same period.
    The company said its net sales for the quarter fell 0.7 percent from the same period the previous year, when it reported sales of $1.79 billion.
    Same-store sales for the quarter declined about 5.6 percent. Same-store sales, or sales at stores open at least a year, are a key indicator of a retailer’s health because they measure revenue at existing locations rather than newly opened ones.
    During the quarter, the retail chain saw shares sink to an eight-year intraday low as government figures show home furnishing sales fell.
    BY THE NUMBERS: Analysts polled by Thomson Reuters estimate a profit of 33 cents per share on revenue of $1.79 billion for the quarter.
    ANALYST TAKE: After the retailer pre-released lower-than-expected third quarter figures in early December, analysts said the company was facing increasing pressure from a difficult sales environment and the ongoing bankruptcy liquidation sales of items by competitor Linens ‘N Things.
    “While we expect consumer spending will likely remain weak, Bed Bath & Beyond may well be one of the few retailers to show earnings growth next year,” SunTrust Robinson Humphrey analyst David Magee told investors in early December. “Moreover, once the macro environment improves, Bed Bath & Beyond should emerge stronger than most and could benefit from some ongoing consolidation in the space along the way.”
    WHAT’S AHEAD: Investors will be looking for an update on how the company’s holiday sales fared and more details about what executives expects business trends to be in the coming year.
    STOCK PERFORMANCE: During the quarter, which ended Nov. 29, shares fell about 34 percent to end the period at $20.29.

  • Where Do You Place Johnny Cash?
    , January 6th, 2009 at 12:11 pm

    Tyler Cowen asks: “Where is the geographic center of Johnny Cash’s moral and musical universe?”
    I’m particularly pleased with my answer. Johnny Cash walks the line.

  • More Financial History
    , January 6th, 2009 at 12:06 pm

    The Economist opens its vault:

    Having fully admitted the disappointments, we find some justification for regarding 1928 as a year of no small promise for the future. Quite possibly it will be remembered in history as a year in which the foundations of recovery were laboriously laid.

  • Iceland to Sue Britain
    , January 6th, 2009 at 11:05 am

    From the 1950s through much of the 1970s, Britain and Iceland were involved in the Cod Wars, which was an overgrown fishing dispute. Now the financial mess has brought these two rivals back to confrontation.

    Iceland’s state-run Kaupthing bank will sue the British government for its decision to force the bank’s British subsidiary into a form of bankruptcy, the Icelandic Prime Minister’s office said Tuesday.
    The committee appointed to run Kaupthing — which collapsed last autumn — is taking Britain to court because it forced the unit Kaupthing Singer & Friedlander into administration at the height of Iceland’s financial crisis, according to the prime minister’s press secretary, Kristjan Kristjansson.
    ”They are suing on the grounds of the actions taken by the Financial Services Authority,” Mr. Kristjansson told The Associated Press.
    The F.S.A., Britain’s financial regulator, swooped in to protect British depositors shortly after Iceland’s banking sector fell under the weight of its bad debts, removing savings accounts from Kaupthing Singer & Friedlander and seizing assets from another Landsbanki, another Icelandic bank.
    Britain said the moves were necessary to safeguard British savers’ deposits, but the actions strained relations between the north Atlantic neighbors. Iceland has repeatedly threatened to sue over the matter.
    It was not clear whether damages would be sought in the Icelandic suit. The F.S.A. and Britain’s treasury did not immediately return requests for comment.
    Prime Minister Geir Haarde said Monday that his government supported the lawsuit and could help fund it.
    ”We think that it is very important that we ascertain if U.K. laws were misused against Icelandic interests,” he said.

    Honestly, it’s hard for me to read that last sentence without laughing.

  • The Price of Forecasts
    , January 6th, 2009 at 12:28 am

    Here’s Paul Farrel highlighting absurdly bullish forecasts from 10 years ago. Let me again make my claim that overly bullish forecasts are routinely held to account, but absurdly bearish ones are rarely held accountable.
    Here’s some advice: If you ever go in the econ-predictions biz, be pessimistic and vague. Then claim anything that goes wrong as something you predicted.
    By the way, are we allowed to start making fun of this?

  • Prepayments and the Subprime Market
    , January 6th, 2009 at 12:01 am

    Here’s the abstract of a recent paper:

    This paper demonstrates that the reason for widespread default of mortgages
    in the subprime market was a sudden reversal in the house price appreciation of
    the early 2000’s. Using loan-level data on subprime mortgages, we observe that
    the majority of subprime loans were hybrid adjustable rate mortgages, designed
    to impose substantial fi…nancial burden on reset to the fully indexed rate. In a
    regime of rising house prices, a fi…nancially distressed borrower could avoid default
    by prepaying the loan and our results indicate that subprime mortgages originated
    between 1998 and 2005 had extremely high prepayment rates. Most important,
    prepayment rates on subprime mortgages were extremely high (i) not just for ARMs
    but FRMs as well, (ii) even before the reset dates on hybrid-ARMs and (iii) despite
    prepayment penalties on the contract. However, a sudden reversal in house price
    appreciation increased default in this market because it made this prepayment exit
    option cost-prohibitive. In short, prepayments sustained the subprime boom and
    the extremely high default rates on 2006-2007 vintages were largely due to the
    inability of these mortgages to prepay (an option that was available for mortgages
    of earlier vintages).

  • Two Days in 2009 and We’re Kicking Butt
    , January 5th, 2009 at 11:16 pm

    With two days under our belt, the Buy List already has a lead over the S&P 500, 4.12% to 2.68%. Obviously, a two-day lead doesn’t mean much, but I mention it because the Buy List was helped out enormously today by the 27.7% jump in Nicholas Financial (NICK).
    Since NICK is such a low-priced stock, the bid/ask spread can make a big difference on how well the Buy List does each day. Some days we’re punished, but some days, like today, it’s a big, big help.