Weak Forecast Dunks Bed Bath

Shares tumble after the retailer's fourth-quarter guidance comes up short.
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Updated from 5:09 p.m. EST

SAN FRANCISCO --

Bed Bath & Beyond

(BBBY) - Get Report

managed to top Wall Street's sales estimates for the third quarter, but the home-products retailer offered a lower-than-expected profit forecast for the current period.

Shares were sliding $1.90, or 6.9%, to $25.50 in after-hours trading Thursday.

The Union, N.J.-company earned $138.2 million for the quarter ended Dec. 1, down from $142.4 million a year earlier. The results included an $8 million benefit from a favorable tax resolution.

Earnings per share rose to 52 cents from 50 cents, as buybacks cut down the shares outstanding. Analysts had expected earnings of 51 cents a share, according to Thomson Financial. Analyst estimates typically exclude one-time gains.

Sales in the third quarter rose to $1.8 billion from $1.62 billion a year ago, getting an extra boost from a shift in the calendar. Wall Street had estimated sales of $1.77 billion.

Same-store sales, or sales at stores open at least a year, inched up 0.8% compared with a 4.6% increase last year in the same period. The company reported weakness in regions hit hardest by the housing slump, including Arizona, California, Florida and Nevada.

Bed Bath & Beyond projected fourth-quarter earnings of 64 cents to 67 cents a share -- well below analysts' average target of 77 cents.

The forecast is based on a projection for flat same-store sales. Total sales are expected to be down 2% to 4% in the fourth quarter, a decline the company attributed to the calendar shift, which gave it one less week of post-Thanksgiving sales.

For the full fiscal year, the company sees earnings in the range of $2.08 to $2.11 a share. Analysts anticipate earnings per share of $2.20.

Shares of Bed Bath & Beyond have already been battered in recent days as investors fretted that the housing slowdown and resulting consumer malaise would slam results. The stock hit an intraday 52-week low of $27.07 Thursday, and ultimately closed at $27.40, down 96 cents, or 3.4%.

The company said still plans to move ahead with its expansion, opening 65 to 70 new Bed Bath & Beyond stores by the end of the fiscal year. Capital expenditures are expected to reach $360 million.