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Bed Bath & Beyond Profits Increase Amid Sluggish Economic Recovery


After it revealed positive 2011 fiscal results, Bed Bath & Beyond's stock skyrocketed today.

Home decor stores are flourishing across the country in what appears to be a recession turnaround. 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. Bed Bath & Beyond co-Chairman Warren Eisenberg expressed his sureness regarding the company's retributions, past and future.

"I am pleased to report that our Company's net earnings per diluted share increased approximately 32% in both the fiscal fourth quarter and the full year to approximately $1.48 and $4.06, respectively," he said in the beginning of the call. "We're pleased that we have been able to continue our strong performance in terms of earnings growth, cash flow generation and overall financial strength, as we constantly challenge ourselves to improve in every aspect of our operation. Our unique decentralized corporate culture continues to produce positive results and we remain confident that our business will continue to grow successfully in the years ahead."

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 of 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 price target on Bed Bath & Beyond from $80 to $82.

Following suit, other retailers selling products similar to Bed Bath & Beyond's 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 Bed Bath & Beyond and Pier 1, are performing respectably as well. Canaccord increased Williams-Sonoma's price target from $53 to $55 on April 3, while Piper Jaffray raised Kirkland's price target 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.

Bed Bath & Beyond is currently trading at $71.83, up +23.84% YTD, while Pier 1 is currently trading at $18.59, up +33.24% YTD and Kirkland is currently trading at $16.29, up +22.48% YTD. On the flip side, Williams-Sonoma is currently trading at $38.15, down -0.91% YTD.

Editor's Note: This content was originally published on by Katey Stapleton.

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