Bed Bath & Beyond eager to grow

Union, N.J. –Bed Bath & Beyond opened its first international store in Ontario, Canada last December – and the $7.0 billion specialty retailer is ready for much more.

“We hope to expand aggressively in Canada, and to be the first choice for the home in Canada,” said BBB co-chairman Warren Eisenberg during last evening’s first-quarter earnings call.

Added president and ceo Steven Temares, “We believe the Canadian market has outstanding growth potential for us.”

Last month BBB followed up on that with a foray into Mexico via a joint venture with privately held retailer Home & More, which currently operates two stores in Mexico City.

How will future growth shape up? The plan for the current fiscal year is to open 50 to 55 new BBB stores in the United States and Canada. In addition, the 981-unit company has signed or is in the process of finalizing about 12 more sites in Canada and is in “active negotiations” for an additional dozen or so.

Still, Temares said the number of new BBB store openings is less than in prior years, as part of the company’s tactic to “afford us flexibility to take advantage of real estate opportunity that might arise from further retail consolidation, if we so choose.”

In results for the quarter ended May 31, BBB yesterday reported net earnings of $76.8 million or $.30 per diluted share. This was down sharply from $104.6 million or $.38 per diluted share in the year-ago period, however it beat analysts’ expectations by several cents per share, and BBB stock was trading about 6% higher today – counter to the retail sector’s general share price falloff of about 3%.

Quarterly net sales of $1.65 billion were up 6.1% from $1.55 billion one year ago; comps grew by 0.8%.

The company’s other nameplates are slated for expansion, too. BBB will “accelerate our growth” of the Christmas Tree Shops by 12 stores and buybuyBABY by a less precise “several” new units this year, and will open Harmon store concepts as departments within “a number of” BBB and Christmas Tree locations.

Also in the works is the addition of fine china to “a number” of BBB stores.

Overall, BBB’s long-term real estate goal remains to operate more than 1,300 stores, Eisenberg said.

Source: Home Textiles Today

Linens 'n Things expected to file bankruptcy

Struggling Clifton-based housewares retailer Linens 'n Things is expected to file for bankruptcy within days, according to industry analysts and observers.

Industry insiders expect Linens to negotiate deals with creditors before declaring bankruptcy.

Concerns about the company's cash flow and strained relationships with vendors caused Fitch Ratings, an international credit rating agency, to lower three of Linens' credit ratings Wednesday afternoon.

"Given that their credit profile is deteriorating, we're also worried about the vendor relationships and their liquidity position," said Tiffany Co, director of Fitch Ratings.

Linens was saddled with $650 million in long-term debt as a result of a $1.3 billion leveraged buyout in late 2006 by a consortium headed by private-equity firm Apollo Management LP, a major investor in retailers. Linens has been struggling over the past year as sales slumped because of the housing slowdown and the daunting task of competing with stronger rival Bed Bath & Beyond Inc.

Warren Shoulberg, editor of Home Furnishings News, said the expectation among industry experts at this week's home-furnishings trade show in High Point, N.C., is that Linens will soon file for what is called a prepackaged bankruptcy.

In a prepackaged bankruptcy, the bankrupt company has already negotiated settlement deals with creditors before filing for bankruptcy.

A prepackaged bankruptcy, Shoulberg said, "would allow them to close some of their weaker stores" and "come out of it smaller but stronger."

Linens on Wednesday did not respond to a telephone request for comment.

The debt Linens incurred when it was taken private made it unable to weather the sales slowdown, Shoulberg said.

"Even when it was publicly owned, they did not generate tons of cash, so paying off all this debt, in a weakened retail situation, is absolutely a huge problem for them," he said.

Linens also has the misfortune "to compete against probably one of the two or three best retailers in the country, which is Bed Bath & Beyond," he said.

Several analysts who cover publicly traded Bed Bath & Beyond, which is based in Union, have been predicting for more than a month that a Linens bankruptcy is likely and could have a positive impact on Bed Bath & Beyond's market share.

Source: The Record online