Bed Bath & Beyond Results Hurt by Lower Sales

Bed Bath & Beyond Inc. reported weaker results on lower sales for the quarter ended in August, part of the critical back-to-school shopping season.

The retailer of products for the home said second-quarter profit fell to $201.7 million from $224 million a year earlier, though earnings per share rose to $1.21 from $1.17 on 13% fewer shares outstanding shares.

The company previously had projected a per-share profit of $1.18 to $1.23.

Sales rose 1.7% to nearly $3 billion, compared with analysts' projection of $3.03 billion, according to Thomson Reuters. Adjusting for currency fluctuations, the company said sales would have improved 2.2%.

Bed Bath & Beyond's sales at stores open for at least a year, a key metric for retailers, rose 0.7%, or 1.1% adjusted for currency fluctuations, well below the company's projected 2% to 3% increase.

The company's shares set a 52-week-low at one point during regular trading hours at $58.81 on Thursday and were at $59.00 in recent after-hours trading.

For the current quarter, the Union, N.J., retailer projects profit of $1.14 to $1.21, compared with analyst projections, according to Thomson Reuters, of $1.19 a share. In the like year-ago period, Bed Bath & Beyond, which has been aggressively buying back shares, earned $1.23 a share.

The company also affirmed its financial projections for the year, calling for sales at established stores to increase 1% to 3% in the third quarter.

Bed Bath & Beyond started in 1971 by selling largely bed linens and bath accessories. It now has more than 1,500 stores under its namesake brand, along with Christmas Tree Shops, Harmon, World Market and others.

As part of its expansion, the company is opening stores in Canada and Mexico and is adding specialty departments, such as beauty care, baby and specialty food.

Higher spending on technology upgrades, sales promotions and digital advertising, however, have eroded the retailer's profit margins in recent quarters. In the most recent reporting period, gross margin narrowed to 38.1% from 38.5% a year earlier.

The company's board also has authorized an additional $2.5 billion to share buybacks. As of Aug. 29, Bed, Bath and Beyond said it had about $305 million left for such repurchases under a previous authorization.

(By Maria Armental)