Bed, Bath and Beyond 2002 Annual Report Download - page 5

BED BATH & BEYOND ANNUAL REPORT 2002
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FISCAL 2002 COMPARED WITH FISCAL 2001
In fiscal 2002, the Company expanded Bed Bath & Beyond
(“BBB”) store space by 17.2%, from 14,724,000 square feet
at fiscal year end 2001 to 17,255,000 square feet at fiscal year
end 2002. The 2,531,000 square feet increase was primarily the
result of opening 95 new BBB stores offset by the closing of
one small store.
Net sales in fiscal 2002 increased $737.2 million to $3.665
billion, representing an increase of 25.2% over the $2.928 billion
net sales in fiscal 2001. Approximately 68% of the increase was
attributable to new store net sales and the balance to an increase
in comparable store net sales and the acquisition of Harmon
Stores, Inc. (“Harmon”) in March 2002.
Approximately 55% and 45% of net sales in fiscal 2002
were attributable to sales of domestics merchandise and home
furnishings, respectively. The Company estimates that bed linens
accounted for approximately 19% of net sales during fiscal 2002
and fiscal 2001. No other individual product category accounted
for 10% or more of net sales during either fiscal year.
Gross profit in fiscal 2002 was $1.519 billion or 41.4% of net
sales, compared with $1.208 billion or 41.2% of net sales a year
ago. The increase in gross profit as a percentage of net sales
was primarily attributable to an improved markup on the mix
of product purchased, partially offset by a relative increase in
markdowns recorded in fiscal 2002 as compared to fiscal 2001.
Comparable store sales for fiscal 2002 increased by
approximately 7.9%, compared with an increase of approximately
7.1% in fiscal 2001. The increase in comparable store net sales
relative to fiscal 2001 reflected a number of factors, including
but not limited to, the continued consumer acceptance of the
Company’s merchandise offerings, a strong focus on customer
service and the continued success of the Company’s advertising
program.
Selling, general and administrative expenses (“SG&A”) were
$1.038 billion or 28.3% of net sales in fiscal 2002 compared to
$861.5 million or 29.4% of net sales in fiscal 2001. The decrease
in SG&A as a percentage of net sales primarily reflects a decrease
in occupancy costs and costs associated with new store openings,
partially offset by an increase in payroll and payroll related items.
Store opening and expansion costs are charged to earnings
as incurred.
Interest income increased to $11.3 million in fiscal 2002
compared to $11.0 million in fiscal 2001 due to an increase
in invested cash partially offset by a decrease in the average
investment rate.
The effective tax rate was 38.5% for both fiscal 2002
and fiscal 2001 due to the weighted average effective tax rate
remaining consistent in the states and territory in which the
Company currently conducts business.
FISCAL 2001 COMPARED WITH FISCAL 2000
In fiscal 2001 (52 weeks), the Company expanded store space
by 20.6%, from 12,204,000 square feet at fiscal year end 2000
(53 weeks) to 14,724,000 square feet at fiscal year end 2001.
The 2,520,000 square feet increase was the result of opening
85 new stores.
Management’s Discussion and Analysis of Financial Condition
and Results of Operations
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated (i) selected statement of earnings data of the Company expressed as a
percentage of net sales and (ii) the percentage change in dollar amounts from the prior year in selected statement of earnings data:
FISCAL YEAR ENDED
PERCENTAGE PERCENTAGE CHANGE
OF NET SALES FROM PRIOR YEAR
MARCH 1, MARCH 2, MARCH 3, MARCH 1, MARCH 2,
2003 2002 2001 2003 2002
Net sales 100.0% 100.0% 100.0% 25.2% 22.2%
Cost of sales 58.6 58.8 58.8 24.8 22.0
Gross profit 41.4 41.2 41.2 25.8 22.4
Selling, general and
administrative expenses 28.3 29.4 29.8 20.5 20.7
Operating profit 13.1 11.8 11.4 38.7 26.9
Earnings before provision
for income taxes 13.4 12.2 11.8 37.6 26.7
Net earnings 8.2 7.5 7.2 37.6 27.7