Bed Bath & Beyond (NASDAQ:BBBY) reported first-quarter results on June 22. The home furnishings retailer's profits are suffering as consumers increasingly shift their shopping online.

Bed Bath & Beyond results: The raw numbers

Metric

Q1 2017

Q1 2016

Year-Over-Year Change

Revenue

$2.742 billion

$2.738 billion

0%

Net Earnings

$75 million

$123 million

(39%)

Earnings Per Share

$0.53

$0.80

(34%)

Data source: Bed Bath & Beyond Q1 2017 earnings press release.

An empty shopping cart in an empty parking lot.

Bed Bath & Beyond's in-store traffic continues to fall. Image source: Getty Images.

What happened with Bed Bath & Beyond this quarter?

Net sales were flat year over year at $2.7 billion. Despite continued growth of more than 20% in its digital channels, Bed Bath & Beyond's comparable sales fell 2%. Like many primarily brick-and-mortar retailers, the home goods giant continues to struggle with declining traffic in its stores, and comparable-store sales decreasing in the "mid-single-digit percentage range."

Moreover, Bed Bath & Beyond's profit margins remain under pressure. Gross margin fell to 36.5% from 37.4% in the year-ago quarter, primarily due to higher shipping costs related to the company's decision to lower its free shipping threshold to $29 from its previous level of $49, as well as higher coupon expense. And operating margin -- which was further dented by higher advertising, payroll, and technology costs -- declined to 5.3% from 7.8%.

All told, net earnings plunged 39% to $75 million, while earnings per share -- which were helped somewhat by the $127 million in share buybacks Bed Bath & Beyond conducted during the first quarter -- fell 34% to $0.53.

Looking forward

Management chose not to update its 2017 full-year guidance, but did suggest that if the "softness" in store traffic and increased promotional expenses the company experienced in the first quarter continue, it's possible that it will need to update its full-year financial forecast after the second quarter.

During a conference call with analysts, CEO Steven Temares also noted that Bed Bath & Beyond has slowed the pace of its store openings and increased the number of store closings in light of deteriorating brick-and-mortar store traffic trends.

Still, management remains optimistic that Bed Bath & Beyond can adapt to these challenges.

"As the retail environment evolves, we continue to actively transform many aspects of our business to reflect these changes," Temares said. "While we work to grow our bottom line and improve our market capitalization, our ongoing investments and efforts have allowed us to create and maintain a strong balance sheet and produce some of the best returns in retail. This is a powerful combination that allows us to take advantage of external opportunities and to make internal structural changes that will better position us to continued success in this rapidly changing period in retail."

Joe Tenebruso has no position in any stocks mentioned. The Motley Fool recommends Bed Bath & Beyond. The Motley Fool has a disclosure policy.