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A bumpy ride for Bed Bath & Beyond

April 11, 2013: 2:32 PM ET

Investors found reason to jump into Bed Bath & Beyond after the retailer posted a spike in sales.

Bed Bath & Beyond got a boost Thursday after the home goods retailer reported stronger-than-expected revenue.

While earnings were in line with forecasts, investors cheered the sales figures. Net sales rose nearly 25%, while same store sales -- a key metric of consumer spending -- nudged up 2.5%

Shares of Bed Bath & Beyond (BBBY) rallied more than 4% Thursday before pulling back.

Some of the retreat could be due to the low same store sales figures. But UBS analysts point out that it was a tough quarter all around for consumer spending and raised their price target on the stock to $68 from $64.

"The notable takeaway for the skeptics was that the company's gross margin declined at an accelerating rate despite an easier comparison," analyst wrote in the report.

Still, they kept a neutral rating on the stock so there is a case to be made for being cautious.

StockTwits traders were mostly in Bed Bath & Beyond's corner.

EricSteiman
$BBBY beating on Revenues is VERY interesting for retail as a whole. Not many companies beat on Revs last quarter. Something to watch Bullish

trawut
$BBBY profit increases from $594M to $990M with 0 long term debt http://stks.co/aQ5u Bullish

Not too shabby for a company that's faced stiff competition from the likes of Amazon (AMZN). A recent study said shoppers will stroll through Bed Bath & Beyond's aisles to get a "feel" for the products they want, only to turn around and buy them online.

retail_guru
Bed Bath inventory management remains impressive - up only 19% vs 24% sales growth.$BBBY has a laser focus on cash flow generation

With those kinds of sales figures, it seems as though the retailer must be doing something (or a number of things) right.

RocketBaxter
$AAPL Even with a miss $BBBY up 2.6% bc of larger BUYBACKS, listening Cook?

Haha. Good one RocketBaxter. And very good question, given how eventful last month's Apple shareholder meeting was.

1nvestor
buybacks are an amazing tool, nice. $BBBY

That's a good point. Bed Bath & Beyond has done a fair amount of buying back its own stock -- a healthy sign. It bought back $305 million during the latest quarter, and has $2.4 billion left under its current authorization.

But as UBS analysts point out, the retailer may want to consider joining the dividend party.

"The company would be well-served by having a more balanced approach," wrote the analysts, and I have to agree. Keeping anything balanced usually pays off in the long run.

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Catherine Tymkiw
Catherine Tymkiw
News Editor CNNMoney

Catherine Tymkiw is a news editor at CNNMoney where she helps oversee breaking news coverage and futures planning. Previously, she was the investing editor. Prior to joining CNNMoney, she was the online editor at Crain's New York Business and has nearly two decades of reporting and editing experience. She tweets @ctymkiwcnn

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