BBBY Beat Stern Agee's Estimates for 2Q

Sterne Agee writes that Bed Bath & Beyond (NASDAQ: BBBY) "reported Q2 EPS of $0.70 (vs. $0.52 LY), beating our estimate and FC of $0.63, which were at the high end of management's $0.59-$0.63 guidance range. Total sales gained 11.6% to $2.137 billion driven by a SSS gain of 7.4% relative to our estimate of 5.0% and Retail Metrics consensus of 5.4%. The upside relative to our estimate was primarily driven by SG&A, which declined 170 bp Y/Y with lower advertising (decreased distribution) and leverage of payroll and occupancy on positive comps. Relative to our estimates, the bottom line benefitted by two cents combined from a lower tax rate and lower share count (with 4.9 million shares repurchased in Q2 for a total of $193 million). The company generated a healthy $187 million in FCF during Q2 and ended the quarter with $1.775 billion in cash and short/long-term investments (or $6.83 per share)."

Sterne Agee maintains its Neutral rating for Bed Bath & Beyond, which closed yesterday at $42.05.