Bed, Bath and Beyond 2004 Annual Report Download - page 5

BED BATH & BEYOND ANNUAL REPORT 2004
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OVERVIEW
Bed Bath & Beyond Inc. and subsidiaries (the “Company”) operate specialty retail stores nationwide, including stores
of Bed Bath & Beyond (“BBB”), Harmon Stores, Inc. (“Harmon”) and Christmas Tree Shops, Inc. (“CTS”), primarily
selling predominantly better quality domestics merchandise and home furnishings. The Company’s objective is to
be a customer’s first choice for products and services in the categories offered, in the markets in which the Company
operates.
The Company’s strategy is to achieve this objective through excellent customer service, an extensive breadth and
depth of assortment, everyday low prices, introduction of new merchandising offerings and development of our
infrastructure.
Operating in the highly competitive retail industry, the Company, along with other retail companies, is influenced by
a number of factors including, but not limited to, general economic conditions, consumer preferences and spending
habits, competition from existing and potential competitors, unusual weather patterns and the ability to find suitable
locations at acceptable occupancy costs to support the Company’s expansion program.
In fiscal 2004, the Company’s consolidated net sales increased by 15.0% and net earnings increased by 26.4%.
Contributing to this increase was the expansion of BBB store space by 12.1%, from 19,353,000 square feet at fiscal
year end 2003 to 21,691,000 square feet at fiscal year end 2004. The 2,338,000 square feet increase was primarily the
result of opening 85 new BBB stores and relocating one existing store.
Also contributing to this increase in fiscal 2004 was an acquisition made by the Company in June 2003. The Company
acquired CTS in fiscal 2003 for approximately $194.4 million, net of cash acquired, including the costs of the acquisi-
tion, comprising $175.5 million of cash and $18.9 million in deferred payments payable in cash over three years.
CTS is a retailer of giftware and household items selling a broad assortment of domestics merchandise and home
furnishings at value prices in many categories including home décor, giftware, housewares, food, paper goods and
seasonal products. CTS’ results of operations are included in the Company’s consolidated results of operations since
the date of acquisition.
Comparable store sales for fiscal 2004 increased by approximately 4.5% as compared with an increase of approxi-
mately 6.3% and 7.9% in fiscal 2003 and 2002, respectively. As of the beginning of the fiscal third quarter of 2004,
CTS was included in the calculation of comparable store sales. The fiscal 2004 increase in comparable store sales
reflected a number of factors, including but not limited to, the continued consumer acceptance of the Company’s
merchandise offerings and a strong focus on customer service with an emphasis on responding to customer feedback.
A store is considered a comparable store when it has been open for twelve full months following its grand opening
period (typically four to six weeks). Stores relocated or expanded are excluded from comparable store sales if the
change in square footage would cause meaningful disparity in sales over the prior period. In the case of a store
to be closed, such store’s sales are not considered comparable once the store closing process has commenced.
The Company plans to continue to expand its operations and invest in its infrastructure to reach its long-term
objectives.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS