Home goods retailer Bed Bath & Beyond Inc. (BBBY), due to release fourth quarter results after market close on Tuesday, April 7, is positioned to benefit from the absence of its stronger rival Linens 'n Things that filed for bankruptcy protection in May. But, the retailer is still on rickety ground, as consumers rein in spending, amid dwindling home prices and growing unemployment.

Moreover, the company is 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 usually makes more than 40% of revenue from auxiliaries including fashions and home products.

Home decor items is one of the worst-hit segments because of its bonds with the choppy housing market. Such items are now being shunned by consumers who have pinned down offhand spending and opted for necessities amid the recession.

Bed Bath & Beyond operates under the names of Bed Bath & Beyond, Christmas Tree Shops, Harmon, Harmon Face Values and buybuy BABY.

While announcing third quarter results, the company said it expects earnings to range between $0.40 and $0.46 per share for the fourth quarter. Wall Street analysts have a consensus earnings estimate of $0.44 per share on revenues of $1.92 billion for the quarter. In the year-ago period, the company earned $0.66 per share on net sales of $1.93 billion.

Full year earnings are currently projected in the range of $1.50 - $1.56 per share. Analysts are looking for earnings of $1.53 per share for the full year.

Earlier, the company had projected fiscal year earnings per share to decline in a low double-digit percentage to mid teens percentage from the $2.10 per share reported in the previous year. The new guidance implies earnings per share to decline by 25% to nearly 29%, worse than the originally expected drop.

For the preceding third quarter, the company witnessed a 37% drop in profit, as consumers horded to liquidation sales held by now-defunct Linens 'n Things. However, the company's quarterly earnings per share topped the Street view.

The Union, New Jersey-based company's third-quarter net income fell to $87.7 million or $0.34 per share from $138.2 million or $0.52 per share in the previous year. Net sales decreased 0.7% to $1.78 billion from $1.79 billion in the prior year. Same-store sales declined 5.6%.

Among others in the sector, Wal-Mart Stores posted a lower fourth-quarter profit, hurt by lawsuit settlement charges and unfavorable currency exchange rates. Though underlying earnings declined year-over-year, Wal-Mart surprised Wall Street and went beyond expectations. The retail giant's fourth-quarter net income was $3.79 billion or $0.96 per share, compared to $4.096 billion or $1.02 per share in the previous year. Revenues rose year-over-year, reflecting higher U.S. comparable store sales and net sales, offset in part by a drop in International sales. Sales at established locations rose 5.1% in February.

For the first quarter, Wal-Mart expects reported earnings per share to be in the range of $0.72 - $0.77. Wal-Mart also sees reported earnings per share between $3.45 and $3.60 for the full year.

Target Corp. (TGT) reported a 40.7% decline in its fourth-quarter profit, daunted by lower retail sales and additions to the allowance for doubtful accounts in its credit card segment. As projected by the company, earnings per share came in below analysts' estimates by two cents. Comparable-store sales for the month of February fell 4.1%.

Bed Bath & Beyond shares, which have been trading between $16.23 and $34.73 in the past 52 weeks, closed Monday's trading session at $26.37, down $1.25 or 4.53%, on a volume of 7.06 million shares.

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