UNION, N.J.-With sales continuing on the upswing, Bed Bath & Beyond logged an 11.1 percent gain in second-quarter net income, to $249.3 million.
Net sales rose 8.9 percent to $2.8 billion in the quarter, which ended on Aug. 31. As Steve Temares, Bed Bath & Beyond’s CEO, explained yesterday in a conference call to analysts, the top line benefited from the inclusion of sales from World Market, which was acquired last year and which accounted for 43 percent of the sales increase. In addition, same-store sales rose 3.7 percent in the quarter, and new stores accounted for about 18 percent of the sales gain, Temares said.
Gross margin declined by 39 basis points to 39.4 percent, due to an increase in coupons, a rise in coupon redemptions and average coupon amount, and a shift in the sales mix to lower-margin product categories. Selling, general and administrative expenses gained 8.4 percent in dollars but were down 11 basis points as a percentage of sales, to 25.6 percent.
For the remainder of the fiscal year, enhancing its omnichannel capabilities will be a crucial endeavor for Bed Bath & Beyond, Temares told the analysts. He cited the new websites for Bed Bath & Beyond and buybuy Baby, debuted during the second quarter. “Also,” he added, “we will continue to upgrade our mobile sites and apps, enhance network communications in our stores, as well as develop future point-of-sale improvements and grow and develop our IT, analytics, marketing and e-commerce groups to lead our omnichannel initiatives.”
Also during the conference call, Eugene Castagna, chief financial officer, said Bed Bath & Beyond is projecting third-quarter sales increase of from 6 to 8 percent, along with a 1 to 3 percent gain in same-store sales.