Jan. 7 (Bloomberg) -- Bed Bath & Beyond Inc., the largest U.S. home-furnishings retailer, said profit fell for the fifth straight quarter and lowered its annual forecast as customers flocked to liquidation sales held by bankrupt rival Linens n’ Things Inc.

Bed Bath & Beyond, based in Union, New Jersey, today projected earnings of $1.50 to $1.56 a share for the year, compared with $2.10 a year earlier. In September, the company said annual profit would decline in the low double-digits to mid-teens on a percentage basis from 2007. The average estimate of 18 analysts surveyed by Bloomberg is $1.59.

Linens ‘n Things has closed all of its U.S. and Canadian locations. Bankrupt retailer Mervyns LLC also chose to liquidate as the U.S. slipped deeper into a recession. Last year, Bed Bath & Beyond said it would initially lose sales during the Linens ‘n Things liquidation. Eventually the removal of its primary competitor will result in increased market share, the company said.

“These are not great numbers and the guidance is not great,” Patty Edwards, a retail analyst and the founder of Seattle-based Storehouse Partners LLC, said today in an interview with Bloomberg Television. “But they aren’t doing any worse than anyone else.”

Bed Bath & Beyond fell 45 cents, or 1.7 percent, to $25.55 today in Nasdaq composite trading. The shares fell 14 percent last year.

Profit Falls 37%

Net income fell 37 percent to $87.7 million, or 34 cents a share, in the third quarter that ended Nov. 29, the company said today in a statement. In the year-earlier period, it earned $138.2 million, or 52 cents. Sales fell 0.7 percent to $1.78 billion.

The company pre-announced its results Dec. 2, saying profit would be no more that 35 cents a share. That was less than the 40-cent average estimate at the time.

Fourth-quarter profit will be 40 cents to 46 cents a share, Bed Bath & Beyond said in the statement, compared with 66 cents a year earlier. Analysts’ average estimate is 50 cents.

To contact the reporter on this story: Carol Wolf in Washington at cwolf@bloomberg.net.

Last Updated: January 7, 2009 17:33 EST