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Bed Bath & Beyond Cuts Guidance; Moody's Raises Outlook

Bed Bath & Beyond on Monday warned that its first-quarter earnings would be below Wall Street's average estimate. This morning Goldman Sachs lowered its rating on the retailer to neutral from buy and cut its price target by $5 to $40. Meanwhile, Moody's raised its 2007 outlook to reflect higher growth expectations for U.S. structured finance.

Bed Bath & Beyond warned that its first-quarter earnings would be below Wall Street's average estimate due to weak consumer demand for home goods, sending shares down 2.6% in extended trade.

The announcement marked a shift for the retailer, which had been a lone bright spot in a bleak home furnishings sector that has stumbled in the wake of a cooling housing market and intense competition from discounters such as Target and Wal-Mart Stores .

In Monday's statement, Bed Bath & Beyond's chief executive, Steven Temares, said "the overall retailing environment, especially sales of merchandise related to the home, has been challenging."

The company said it expects to earn between 36 cents and 38 cents a share for the first quarter. Analysts, on average, had been expecting earnings of 39 cents a share, according to Reuters Estimates.

In the same period last year, the retailer earned 35 cents a share.

Same-store sales, a key retail measure that tracks sales at stores open at least a year, are expected to rise about 1.6%. Bed Bath & Beyond had previously forecast an increase of between 3% and 5%.

Net sales are expected to rise about 11% from last year's levels. Last month, it had said that sales for the first three quarters of the year would be up between 10% and 12%.

Bed Bath & Beyond will report earnings for the fiscal quarter ended June 2 on June 27. It said it would update its outlook for the year at that time.

The retailer operates the Bed Bath & Beyond, Christmas Tree Shops, Harmon Stores and buybuy BABY chains.

Moody's Raises 2007 Outlook

Moody's , the parent of its namesake credit rating agency, raised its 2007 outlook to reflect higher growth expectations for U.S. structured finance.

The company said it now sees 2007 per-share earnings growth outlook in the low- to mid-teens percent range and revenue growth outlook in the mid- to high-teens percent range.

Moody's had earlier expected per-share earnings to grow by a low double-digit percentage, and revenue to grow by a low-teens percentage for 2007.

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