Sterne Agee Comments On Strong Bed Bath & Beyond FY11 Guidance

According to Sterne Agee, Bed Bath & Beyond (NASDAQ: BBBY) posted another impressive beat, with Q4 EPS of $1.12 (vs. $0.86 LY), well above our estimate of $0.96 and FC of $0.97, both of which were above the high end of the $0.91-$0.95 guidance range.

Sterne Agee reported that SSS gained a strong +8.5% vs. +11.5% LY, the most challenging comparison of the year, and well above estimates (SAL +3.0%, Cons +2.1%, Guid +LSD). “Apart from the sales upside, both GMs and SG&A came in better than expected; GMs improved 40 bp Y/Y (with decreased coupon expense and lower markdowns more than offsetting negative mix shift) and SG&A leveraged 150 bp (primarily due to lower payroll and occupancy on stronger than expected comps). Unfortunately, management does not provide any color regarding performance by concept, product category or region and does not disclose sales metrics. However, we continue to be impressed by the company's de-centralized business model, which gives individual store associates a lot of flexibility to align their store assortments to local market tastes/preferences and which we would view as a key element of the company's success. To some extent perhaps, we believe that BBBY may continue to benefit from the closure of LNT now that the consumer seems to be feeling somewhat better and from what seems to be a home entertaining/cooking trend in general.”

Bed Bath & Beyond closed yesterday at $49.39.