(Updates)

** Shares of online retailer Overstock.com , or the new Bed Bath & Beyond, fall as much as 27.7% to hit a near three-month low of $19.83

** Stock last down 27%, on track to record worst day since July 2008

** OSTK, rebranded as Bed Bath & Beyond after acquiring the company's intellectual property assets in bankruptcy, sees Q3 revenue declining in mid-teens pct range

** Expects high-teens percent decline in avg order value for Q3 ended Sept. 4, even as it says it added new customers; projects gross margin of about 18%

** "Visits to our website have increased ... promotional offers and expanded product assortment are resonating with customers, and they love the refreshed mobile app" - CEO Jonathan Johnson

** While co is adding customers, "promotions are much deeper and advertising expense much higher," Jefferies analyst Jonathan Matuszewski notes

** Investors are grappling with the No. 1 question since OSTK acquired Bed Bath's IP: "Growth at what cost?" - Jefferies

** Including session's losses, OSTK up ~3% YTD

(Reporting by Deborah Sophia in Bengaluru)

((DeborahMary.Sophia@thomsonreuters.com))