What happened

Shares of retailer Bed Bath & Beyond (NASDAQ:BBBY) tumbled on Friday after a disappointing first-quarter report. Bed Bath & Beyond missed analyst estimates across the board, driven by a drop in comparable sales. The company cited weak store traffic, although it maintained its full-year guidance. The stock was down 11.5% at 11:10 a.m. EDT.

So what

Bed Bath & Beyond reported first-quarter revenue of $2.74 billion, flat year over year and $50 million below the average analyst estimate. Comparable sales slumped 2% overall, with a mid-single-digit decline in the company's stores partially offset by a 20% increase from digital channels. Soft store traffic weighed on the company's top line.

The interior of BEYOND at Liberty View, which contains four of Bed Bath & Beyond's brands.

BEYOND at Liberty View, containing four of Bed Bath & Beyond's brands. Image source: Bed Bath & Beyond.

Earnings came in at $0.53 per share, down from $0.80 per share in the prior-year period and $0.13 below analyst expectations. Bed Bath & Beyond pointed to higher expenses related to shipping, coupons, and advertising, as well as lower sales, as the drivers behind the profit decline.

Bed Bath & Beyond is maintaining its guidance for the full-year despite the weak first quarter, but plans to provide an update if necessary after the second quarter. Management is unsure whether the problems of the first quarter will spill into the rest of the year, with the earnings press release stating: "It remains to be seen whether these challenges were more pronounced in, or unique to, the first quarter due to the smaller sales base in this period, and/or a later start to the summer selling period."

Now what

Shares of Bed Bath & Beyond are now below $30, something that hasn't happened since the aftermath of the financial crisis. Both gross and operating margins have been in decline for years, and the first quarter continued that trend. Bed Bath & Beyond's current guidance calls for a decline in per-share earnings of as much as 10% this year, but the outlook will likely worsen if sales don't pick up in the second quarter.