Home goods retailer Bed Bath & Beyond Inc. (BBBY), Tuesday said its fourth quarter profit declined from last year, hurt by worsening economic conditions. The company's quarterly earnings, however, exceeded analysts' expectations as well as its own estimates. Following the news, the company's shares gained more than 15% in the after-hours trading.

The ongoing economic crisis has forced customers to rein in spending, while focusing more on absolute necessities. Massive job cuts by companies have added to the gloom. This has led to a decline in sales at many retailers. With the mortgage crisis solution nowhere in sight, fewer people are changing homes, which mean difficult times for those selling home improvement products.

Bed Bath & Beyond is also facing competition from discount store operators including Wal-Mart Stores Inc. (WMT) that have ramped up competition to attract budget conscious shoppers who opt to trade down for less pricey products. Target Corp. (TGT) usually makes more than 40% of revenue from auxiliaries including fashions and home products.

Bed Bath & Beyond posted net earnings of $141.4 million or $0.55 per share for the fourth quarter, down from $172.9 million or $0.66 per share in the prior year quarter. On average, 18 analysts polled by Thomson Reuters expected the company to earn $0.44 per share for the fourth quarter. Analysts' estimate typically excludes special items.

The Union, New Jersey-based company had earlier estimated its earnings to be in the range of $0.40 to $0.46 per share for the fourth quarter.

Fourth quarter net sales declined 0.5% to $1.92 billion from $1.93 billion in the same quarter last year. Comparable store sales in fiscal fourth quarter of 2008 decreased by about 4.3%. Fifteen analysts had a consensus revenue estimate of $1.92 billion for the fourth quarter.

Gross profit for the quarter declined to $785.06 million from $799.10 million in the year-ago quarter. Operating profit was $231.28 million, down from $259.44 million recorded in the prior year quarter.

Since the beginning of fiscal first quarter on March 1, 2009, Bed Bath & Beyond has opened 1 additional Bed Bath & Beyond store and 1 additional buybuy BABY store.

As of February 28, 2009, the company had a total of 1,037 stores, including 930 Bed Bath & Beyond stores, 52 Christmas Tree Shops stores, 15 buybuy BABY stores, and, after the closing of 1 store, 40 stores under the names of Harmon or Harmon Face Values.

Bed Bath & Beyond is also involved in a joint venture, which operates 2 stores in Mexico under the name Home & More.

For fiscal 2008, Bed Bath & Beyond reported net earnings of $425.1 million or $1.64 per share, compared to $562.8 million or $2.10 per share in the previous year.

Annual net sales increased 2.3% to $7.21 billion from $7.05 billion in the preceding year. Comparable store sales for fiscal year 2008 decreased about 2.4%.

Analysts expected the company to report earnings of $1.53 per share on revenue of $7.20 billion for the year.

Bed Bath & Beyond closed Tuesday's regular trading session at $25.51, down 86 cents or 3.26% on a volume of 6.58 million shares. In the after-hours, the shares gained $3.91 or 15.33%. The stock has been moving in a range of $16.23 - $34.73 for the past 52 weeks, with an average daily volume of about 6.42 million shares for the past three months.

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