Shares of retailer Bed Bath & Beyond (NASDAQ:BBBY) have had a terrible run the last couple of years. The company has struggled to keep up with changing consumer trends, and profitability has been falling as investments to update the business model have not produced results. There is a dividend and share repurchase program, but those two shareholder returns aren't enough to warrant owning this retailer.

The good ...

Back in 2016, Bed Bath & Beyond initiated a first-ever dividend of $0.125 a share. The company raised it to $0.15 a share in early 2017, and after the big drop in the stock price, the annual yield is at an attractive 2.8%.

In addition to the dividend, there is also a share buyback program in effect. During the last reported quarter, the company bought $24 million of its stock off the open market. Management said it has another $1.5 billion left under the current program. That purchasing activity is effectively another return to shareholders, as it helps offset any selling activity on Wall Street. But considering the company's price movement the last few years, it hasn't been money well spent.

... and the really bad

The company's strategy to catch up in the digital era hasn't made the cut. While Bed Bath & Beyond has been good about increasing its payday to investors by way of dividends and share buybacks, it hasn't been so good at using cash to invest back into operations. Numerous acquisitions were made the last couple of years for online-only retailers like One Kings Lane and PersonalizationMall.com. All of them have been very small, though, and have done little to move the needle.

The exterior view of a Bed Bath & Beyond with people walking in.

Image source: Bed Bath & Beyond.

As for internal developments, the company has been working to keep its home furnishings, decor, and other "lifestyle" products differentiated from the competition. Work has also been done to update its selling model and logistics to support online order fulfillment. Bed Bath & Beyond's namesake stores, as well as its Cost Plus World Market, buybuy Baby, and Harmon have a lot of competition, though, both on the internet and in the traditional brick-and-mortar model. Growth in digital hasn't been able to offset in-store declines, and the company notched a 0.3% comparable-sales decline in the last quarter.

Despite the ugly picture, business isn't exactly in desperation mode. Revenue has continued to inch higher. However, with the rate of spending being what it has been, free cash flow -- a measure of profitability that excludes things like depreciation of property -- has been getting hammered. That much spending should move the revenue needle, but it hasn't yet.

BBBY Free Cash Flow (TTM) Chart

Data by YCharts.

In my mind, this would suggest that Bed Bath & Beyond would serve shareholders better by maximizing profits and paying an even bigger dividend. However, in the era of online retailing and intense competition, the company has little choice but to try to keep up.

That costs money, though. Bed Bath & Beyond is buoyant right now, but the trend would suggest the company will stagnate at best in the long term. Given that, the dividend and share repurchases may look attractive, but not enough to make this one worth owning.

Nicholas Rossolillo has no position in any of the stocks mentioned. The Motley Fool is short shares of Bed Bath & Beyond. The Motley Fool has a disclosure policy.