Bed Bath & Beyond Posts 32% Jump in Earnings

On a conference call, company officials attributed the rise in the retailer's gross margin to higher markups on its products. The benefit from those markups outweighed the effect of lower margins at the company's recently acquired Christmas Tree Shops division, company officials said.

The company also saw gains on its operating expenses. Such costs, which typically include advertising, administrative and store payroll expenses, fell 81 basis points to 27.71% of sales.

In the quarter, Bed Bath & Beyond benefited from cost controls on its store opening expenses, company officials said. Those cost controls outweighed increased payroll and advertising costs, they said.

The company plans to open 80 to 90 new Bed Bath & Beyond stores next year, which would represent growth of 14% to 16% over its expected base of 576 at the end of its fiscal year in February. However, the company's new stores have a smaller average size than its older stores.

Some investors have worried that Bed Bath & Beyond's slowing square footage growth will eventually effect its overall sales and earnings growth.