From Home Furnishing Business
Bed Bath & Beyond Profit, Margins Decline
Bed Bath & Beyond Inc.'s quarterly profit and margin declined as the home-goods retailer reported nearly flat sales in the May quarter.
The results missed Wall Street targets, sending shares down 5% to $40.86 in after-hours trading.
Still, the New Jersey-based company affirmed its profit projection for the year, saying it expects results "to be comfortably" within its previous range of $4.50 to about $5 a share despite higher costs tied to its acquisition of online furnishing store One Kings Lane.
Like other retailers, Bed Bath & Beyond's margins have been hurt by sales promotions and a shift away from traditional brick-and-mortar stores. In the most-recent period, ended May 28, gross margin narrowed to 37.4% from 38.1% a year earlier.
The company's faltering results have added pressure and weakened its stock, down 11% this year and 39% over the past 12 months. Last year, shareholders voted down the company's executive compensation package. The vote is nonbinding.
This year, the company is again facing pressure from Institutional Shareholder Services and Glass Lewis & Co. along with New York City Comptroller Scott M. Stringer, as administrator of the city's pension funds, who have asked shareholders to reject again the company's executive compensation plan, vote against several board nominees and support a so-called proxy-access initiative, allowing shareholders to nominate members to the company's board.
The company's annual shareholder meeting is scheduled for July 1.
Over all, Bed Bath & Beyond reported first-quarter profit of $122.6 million, or 80 cents a share, down from $158.5 million, or 93 cents a share, a year earlier. The company had 10% fewer shares outstanding in the latest quarter.
Meanwhile, sales edged down less than a tenth of a percent at $2.74 billion.
Analysts surveyed by Thomson Reuters had projected 86 cents a share of earnings on $2.78 billion in sales.
Sales at stores open for at least a year, a key metric for retailers, declined about 0.5%, compared with a year-earlier increase of 2.2% and analysts' projection for an increase of 0.6%, according to FactSet.