Image source: The Motley Fool.

Bed Bath & Beyond (NASDAQ:BBBY) reported third-quarter results on Dec. 21. The home-goods retailer is struggling with sluggish sales and falling margins.

Bed Bath & Beyond results: The raw numbers

 Metric

Q3 2016

Q3 2015

Year-Over-Year Change

Revenue

$2.955 billion

$2.952 billion

0.1%

Net earnings

$126 million

$178 million

(28.9%)

Earnings per share

$0.85

$1.09

(22%)

Data source: Bed Bath & Beyond Q3 2016 earnings press release.

What happened with Bed Bath & Beyond this quarter?

Net sales inched up 0.1% year over year to $2.955 billion. On a comparable basis, sales fell 1.4%, compared with a 0.4% increase in the year-ago quarter, as the impact of "low-single-digit" declines in Bed Bath & Beyond's same-store sales more than offset a greater than 20% increase in comps from the company's digital channels.

"The lion's share of our business is done in bricks and mortar," said CEO Steven Temares during a conference call with analysts. "And the foot traffic that we're seeing, the reduction in foot traffic, I think has been seen across all retail, and as long as we have a significant component in bricks and mortar like that, that is a bit of a headwind for us."

Bed Bath & Beyond's profitability also continued its downward trend, with gross and operating margins falling to 37% and 7.1%, respectively -- down from 37.8% and 9.9% in the prior-year period. Higher coupon, shipping, labor, and technology costs all contributed to the decline.

All told, net earnings plummeted 29% to $126 million, while earnings per share, which were helped somewhat by share buybacks, dropped 22% to $1.05.

Looking forward

These results led Bed Bath & Beyond to cut its full-year sales forecast. Comparable sales are now projected to decline by approximately 50 basis points, with net sales increasing about 1%. Bed Bath & Beyond's previous guidance was for full-year comparable sales to be flat to up 1%, with net sales expected to rise about 125 to 140 basis points than the increase in comp sales.

Bed Bath & Beyond also said that it now expects its fiscal 2016 earnings per share to come in at the low end of its guidance range of $4.50 to $5.00.

"In summary, it continues to be a transitional time for retail," said Temares. "As our business transforms, we are navigating the competitive landscape and adapting as customer preferences and purchasing behavior evolve."