Insiders Are Booking Profits In This Battling Bedding and Bath Retailer

Senior executives at Bed Bath & Beyond Inc. (NASDAQ:BBBY) have sold millions of dollars worth of stock recently.  However, these executives retain large stakes in the company and the company has performed well as of late, so it’s not clear that these sales should be interpreted as a bearish signal.

Shares of the company have increased 11% year-to-date versus the PowerShares QQQ Trust, Series 1 (NASDAQ:QQQ) increase of 5%.  Virtually all of the company’s increase can be attributed to today’s trading, in which the company topped analysts’ Q4 estimates and issued Q1 2011 guidance in excess of analyst expectations.  The company reported fourth quarter earnings of $285.5 million or $1.12 per share, up from $226 million in the year-ago period.  Revenues increased roughly 12% to $2.5 billion.  Analysts had been expecting earnings of $0.97 per share.  Over the past 52-weeks shares of the company have increased 23% compared to the PowerShares QQQ Trust, Series 1 (NASDAQ:QQQ) 15% increase.

The company’s profit margins appear typical of a retailer: net profit margin for 2010 was 7.66%, operating margin was 12.53%, and EBITD margin was 14.88%.  Its return on average assets was 12.74% and its return on average equity was 18.04%.  Those margins compare favorably with Wal-Mart Stores, Inc. (NYSE:WMT), whose margins were 3.78%, 6.05%, and 7.87% respectively.

Following are details on these transactions:

  • Steven H Temares, who is the Chief Executive Officer, exercised 300,000 options at a cost of $24.11 per option on January 25th, 2011.  He subsequently sold 300,000 shares on January 25th at market prices between $49.04 and $49.22.  His net proceeds for these transactions are $7,497,844.  He currently holds 433,743 shares, with a market value of $24,287,661.67 as of the most recent price of $53.69 per share.
  • Matthew Fiorilli, who is the Senior Vice President, Stores, exercised 75,000 options at a cost of $23.78 per option, on September 24th, 2010.  He subsequently sold 75,000 shares at market prices between $43.38 and $43.74.  The net proceeds for these transactions were $1,478,035.  He presently holds 192,203 shares with a market value of $10,319,379.07 as of the most recent price of $53.69 per share.
  • Arthur Stark, who is the President and Chief Marketing Officer, exercised 15,000 options at a cost of $23.78 per option on April 26th, 2011.  He subsequently sold 6,402 shares at a market price of $48.28 on April 26th, 2011.  The net proceeds for these transactions are -$47,636.  He presently holds 112,643 shares with a market value of $6,047,802.67 as of the most recent price of $53.69 per share.

Other insiders at Bed Bath & Beyond include:

  • Warren Eisenberg, Co-Chairman of the Board of Directors.
  • Leonard Feinstein, Co-Chairman of the Board of Directors.
  • Dean S. Adler, member of the Board of Directors and Chief Executive Officer of Lubert-Adler Partners, L.P.
  • Stanley F. Barshay, member of the Board of Directors and Chairman of Schering-Plough Consumer HealthCare Corporation (NYSE:MRK)
  • Klaus Eppler, member of the Board of Directors and Pensioned Partner, Proskauer Rose LLP
  • Patrick R. Gaston, member of the Board of Directors and Executive in Residence and Senior Advisor, Clinton Bush Haiti Fund
  • Jordan Heller, member of the Board of Directors and President, Heller Wealth Advisors, LLC
  • Victoria A. Morrison, member of the Board of Directors and Executive Vice President & General Counsel, Edison Properties, LLC
  • Eugene A. Castagna, Chief Financial Officer & Treasurer & President – Buy Buy Baby, Inc.
  • Richard C. McMahon, Chief Strategy Officer and Vice President – Corporate Operations & President – BBB Canada Ltd.
  • Allan N. Rauch, Vice President – Legal and General Counsel
  • G. William Waltzinger, Jr., Vice President – Corporate Development and President, Harmon Stores, Inc.

Competitors to Bed Bath & Beyond include Target (NYSE:TGT), Macy’s (NYSE:M), Wal-Mart (NYSE:WMT), Pier 1 Imports (NYSE:PIR) and Williams Sonoma (NYSE:WSM).

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