Chief Executive Steven Temares told analysts during a conference call that results reflected "challenges represented by macroeconomic conditions."
Jesup & Lamont analyst Brian Postol said Bed Bath & Beyond's disappointing outlook pointed to a recession among home goods retailers, but said more was at play.
"I think to some extent in this scenario you can point to the economy a lot, but you've got a company with 880 stores ... we think they're bumping up against saturation," said Postol, who does not own shares of the company.
Bed Bath & Beyond, which operates its namesake chain, as well as the Christmas Tree Shops, Harmon Stores and buybuy BABY chains, said fourth-quarter net profit fell to $172.9 million, or 66 cents per share, from $205.8 million, or 72 cents a year ago.
Analysts, on average, were expecting the company to earn 65 cents a share for the quarter on $1.95 billion in sales, according to Reuters Estimates.
Quarterly sales fell 3 percent to $1.93 billion.
An increase in coupon redemptions also crimped gross profit margins, the company said.
Bed Bath & Beyond has faced a challenging sales environment in recent quarters as consumer appetite for home goods has waned amid an ailing U.S. housing market.
U.S. consumers have cut back on discretionary spending due to the rising cost of energy and falling home values.
But company executives said Bed Bath & Beyond was taking market share from competitors in the difficult environment.
"We believe we can look back at this period as one affording exceptional opportunity to gain market share and improve our competitive position," Temares said.
Analyst Postol said he was dubious of that claim: "At the end of the day, it's difficult to say when you're comping negative that you're gaining market share."
Discount chains and department stores were taking sales from the company, Postol said.
Same-store, or "comp" sales, a key gauge of retail performance, fell 0.4 percent in the quarter. They are expected to be relatively flat to slightly negative in fiscal 2008, assuming no significant change in the macroeconomic environment.
For the first quarter, the company expects earnings to range between 26 cents to 30 cents per share. Wall Street, on average, has been expecting earnings of 37 cents, according to Reuters Estimates.
Net sales are expected to grow between 4 percent and 6 percent in the first quarter and be "slightly stronger" for the remainder of fiscal 2008.
The company plans to open an additional 50 to 55 Bed Bath & Beyond stores in the United States and Canada in fiscal 2008. It has a target of some 1,300 stores domestically.
Bed Bath & Beyond shares fell 5 percent to $27.90 in extended trading after falling 4.7 percent in regular trading to close at $29.47 on Nasdaq.