Bed Bath & Beyond Profits Increase Amid Sluggish Economic Recovery

Home decor stores are flourishing across the country in what appears to be a recession turn-around. In an almost unanimous call across the research firm board, Bed Bath & Beyond's BBBY price target skyrocketed today following its promising Wednesday night conference call. The large retail chain reported stellar results for its fiscal 2011 earnings, along with optimistic guidance suggesting the opening of 40 new locations in 2012. BBBY Co-Chairman Warren Eisenberg expressed his sureness regarding the company's retributions, past and future. The company reported net earnings of $351 million or $1.48 per share, versus $283.5 million or $1.12 per share, in the year ago period. This easily beat analysts' consensus EPS estimates of $1.33. Net sales came in at $2.732 billion, which was a 9.1% increase over the $2.505 billion the company reported in last year's fourth quarter. This also exceeded Wall Street consensus revenue estimates of $2.66 billion. Many analysts took notice to the leaps and bounds Bed Bath & Beyond has strived to overcome throughout the past year, including intense price promotions throughout the home division in holiday 2011 and a spike in cotton prices. Among at least five other estimate/price target increases, Wedbush established its über confident support in the company. “We reiterate our OUTPERFORM rating, as we believe the company should continue to benefit from industry dominance, good visibility for [cross-merchandising] opportunities, future growth potential for newer concepts, and strong balance sheet and cash flow. Longer term, we remain a believer in BBBY and see several distinct performance drivers: well-differentiated assortments at the core BBBY and cross-concept merchandising evolving (HBA, food) to drive existing store comps, and marketing and coupons continue to drive traffic,” Wedbush said, raising its PT on BBBY from $80 to $82. Following suit, other retailers selling similar products to BBBY are also supplying consumers and analysts with good news. Pier 1 Imports PIR made upbeat announcements earlier today that suggest the company is no longer in a turnaround phase, according to Oppenheimer. “Management upped the components of its longer-term strategic plan and for the first time in a while offered detailed financial guidance for the next several quarters. PIR is once again paying a regular quarterly dividend. We view the PIR investment story to still have legs. Store volumes are well off lows but remain far from potential. Shares in our view significantly underestimate the longer-term earnings and cash flow potential of the chain,” Oppenheimer said in a research report today. Williams-Sonoma WSM and Kirkland KIRK, while not as glorified in the market today as BBBY and PIR, are performing respectably as well. Canaccord increased WSM's PT from $53 to $55 on April 3rd, while Piper Jaffray raised KIRK's PT from $17 to $20 last month. Scooting past the competition has clearly been boding well for Bed Bath & Beyond, Williams-Sonoma and Pier 1 during this frustrating economic stretch, with all three racing ahead of the S&P 500. As Kirkland plays market catch-up, things are sure to get interesting over the next year. BBBY is currently trading at $71.83, up +23.84% YTD, while PIR is currently trading at $18.59, up +33.24% YTD and KIRK is currently trading at $16.29, up +22.48% YTD. On the flip side, WSM is currently trading at $38.15, down -0.91% YTD.