For the past several months, it's been plausible to conclude that retail sales overall are a bit soft, but that best-in-class companies will still perform. For me, that conclusion was decisively shattered yesterday when Bed Bath & Beyond (NASDAQ:BBBY) lowered its EPS forecast for the first quarter.

Release and aftermath
In its brief and somewhat terse release, the company announced that it expected to deliver EPS of $0.36-$0.38 in the just-completed quarter, with comp sales of 1.6%. This is the first time in 15 years (since it went public) that BBBY has issued an earnings warning.

Investors were shocked. Analysts were expecting EPS of $0.39 and comp sales of 3%-5%. The news was so surprising that Ben Bernanke, chairman of the Federal Reserve, had to share time with the company -- most of Tuesday's news articles that featured Bernanke's remarks jumped back and forth between monetary policy and sales of comforters. BBBY stock lost more than 5% on the day.

BBBY has owned its sector
This just doesn't happen! BBBY has "owned" its sector for years, churning out double-digit EPS growth and mid-single-digit comp sales growth like they were sausages. Look at the five-year history below:

2006

2005

2004

2003

2002

EPS Growth*

12%

16%

26%

31%

35%

Comp Sales

4.9%

4.6%

4.5%

6.3%

7.9%
*2006 EPS growth excludes a $0.07 per-share unusual charge.

It's true the company's EPS growth rate has slowed in the past few years, with some recent debate over free cash flow and future growth prospects. But my view is that BBBY is renowned for merchandising discipline, operations excellence, and a savvy real estate strategy. As long as the consumer is buying home furnishings, a large and loyal following will shop BBBY first.

I take back my comment last week about Williams-Sonoma (NYSE:WSM), when I implied that Bed Bath & Beyond would deliver solid comps in the first quarter. It's now clear that consumer spending on home furnishings is sharply off. This is not a good omen for struggling home furnishing retailers Pier 1 (NYSE:PIR), Bombay (NYSE:BBA), and Ethan Allen (NYSE:ETH).

A waiting game?
All we know today is EPS and comp sales. When the company releases first-quarter results on June 27, we'll be able to see if this is just a temporary sales blip. I expect most investors will play a waiting game until then, allowing the stock to drift.

If the rest of the P&L is solid, and inventories are in line, this will look like a buying opportunity. There's still plenty of time to sell through spring/summer merchandise. But if we see deeper problems, like inventory showing some bloat, the stock could be in for an extended slump.

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Fool contributor Timothy M. Otte surveys the retail scene from Dallas. He welcomes comments and does not own shares of any of the companies mentioned in this article. The Fool has a disclosure policy.