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Bed Bath & Beyond drops nearly 10 percent

NEW YORK (AP) -- Shares of Bed Bath & Beyond tumbled nearly 10 percent on Thursday, after the housewares company's second-quarter earnings disappointed and it provided a weak third-quarter forecast.

Late Wednesday Bed Bath & Beyond Inc. reported earnings of 98 cents per share for the period ended Aug. 25, hurt in part by heavy couponing to draw customers. The results fell short of the $1.02 per share that analysts surveyed by FactSet had expected.

The Union, N.J., company also said it anticipates third-quarter earnings between 99 cents and $1.02 per share, mostly below the $1.02 per share forecast by Wall Street.

But Bed Bath & Beyond's results are "difficult to compare" to guidance because they include undisclosed charges related to the purchases of Cost Plus and Linen Holdings, said Barclays analyst Alan M. Rifkin.

"We believe the lack of detail regarding core Bed Bath & Beyond and recent acquisitions could be a potential headwind to share performance," he said in a note to investors.

Nomura's Arum Rubinson agreed that the recent acquisitions have made Bed Bath & Beyond's results more complex and as the company continued its practice of not taking Q&A on its conference call, said that "we have more questions than answers at this point" on how to model the changing business.

Citi's Kate McShane actually raised her forecast for the retailer's fiscal 2013 earnings to $4.56, up from $4.45, due to expected additions from the Cost Plus acquisition. She lifted her target price to $74. McShane remains "Neutral" on BBBY shares based on increased competition from online retailers and stock overhang from the potential departure of key merchandising talent following the relocation of Buy Buy Baby headquarters. She said these factors are partly offset by easing retail sales comparisons and a debt-free balance sheet.

The retailer's stock fell $6.71 to close at $62.08 Thursday. The stock, which traded a year ago at a 52-week low of $53.15, had been on an upward trend, peaking in June at $75.84. Shares then plunged below $60 after the retailer in June issued a disappointing second-quarter forecast and told investors that it was being forced to use more coupons to get people to shop, and that was hurting its profitability. The stock had recovered much of those losses in the past few months before today's drop.