June 4 (Bloomberg) -- Bed Bath & Beyond Inc., the largest U.S. home-furnishings retailer, said fiscal first-quarter profit was a less-than-forecast 36 cents to 38 cents a share, hurt by a housing market slump. The stock dropped 2.3 percent.

Twenty-one analysts surveyed by Bloomberg estimated average profit of 40 cents a share for the three months ended June 2. Bed Bath & Beyond told analysts on a conference call in April that profit would be 39 cents. Today's report is preliminary, and the company will report full results on June 27.

The U.S. is experiencing a real-estate slide as rising mortgage defaults put more houses back on the market and prompt banks to tighten lending standards, making home purchases less affordable. An index of pending sales of existing homes in the U.S. unexpectedly fell to the lowest level in more than four years in April, a further sign the property slowdown may linger.

``We're to the point where the drag on housing activity is definitely going to have an impact,'' said Timothy Allen, an analyst with Jefferies & Co.

Shares of Bed Bath & Beyond slid 97 cents to $39.50 in extended trading. The company today reported sales at older stores rose 1.6 percent. Union, New Jersey-based Bed Bath & Beyond earlier forecast a gain of as much as 5 percent. Total sales rose 11 percent, in line with forecasts made in April.

``The overall retailing environment, especially sales of merchandise related to the home, has been challenging,'' Chief Executive Officer Steven H. Temares said in a statement. Ronald Curwin, senior vice president of investor relations, declined to elaborate beyond the statement.

Index Slide

In April, an index of signed purchase agreements, or pending home resales, fell 3.2 percent to 101.4, the lowest since February 2003, after a revised 4.5 percent decline in March, the National Association of Realtors said June 1 in Washington. The index was down 10.2 percent from April 2006.

During the fiscal fourth quarter, Bed Bath & Beyond used coupons to lure customers, and its profit rose 4 percent. The company marketed 20 percent-off coupons to win customers away from department stores and other competitors, including Linens 'n Things Inc.

``They're great operators, and they're doing everything within their control,'' Allen said today. Allen said he doesn't own shares of the company, and Jefferies doesn't have a banking relationship with Bed Bath & Beyond.

Other retailers have also been harmed by the housing slowdown, the home-improvement industry in particular. Home Depot Inc., the world's largest home-improvement chain, said last month that first-quarter net income fell 30 percent and predicated annual earnings would fall to the low end of earlier forecasts.

Lowe's Cos., the second-largest home-improvement retailer, also lowered its annual earnings forecast last month and said first-quarter net income fell 12.1 percent.

To contact the reporters on this story: James Temple in San Francisco at jtemple@bloomberg.net; Brad Skillman in New York at bskillman1@bloomberg.net

Last Updated: June 4, 2007 22:24 EDT