Shares of Bed Bath & Beyond (NASDAQ:BBBY) are falling today after the retailer reported first-quarter results. While Bed Bath & Beyond matched analyst estimates for revenue, a decline in comparable sales was enough bad news to send the stock down as much as 10% Thursday morning. By 12:40 p.m. EDT, the stock was down just 2%.
Bed Bath & Beyond reported first-quarter revenue of $2.75 billion, up 0.4% year over year and in line with the average analyst estimate. Comparable sales dropped 0.6%, with strong sales from digital channels being more than offset by a mid-single-digit decline in sales from stores.
Earnings per share came in at $0.32, down from $0.53 in the prior-year period. This number was reduced by $0.06 by severance costs, which were not included in the company's modeling assumptions. There was also a favorable $0.05 impact from the adoption of the ASC 606 accounting standard, which was anticipated by the company. Analysts were expecting earnings of $0.32 per share.
Despite the slump in comparable sales, Bed Bath & Beyond maintained its full-year guidance for earnings per share in the low-to-mid $2.00 range. The company also said that it remains on track with its three-year financial goals, which include comparable sales growth starting this year and a return to earnings growth by fiscal 2020.
Poor performance from Bed Bath & Beyond's stores knocked down the company's results during the first quarter. Gross margin was 35%, down from 36.5% in the prior-year period, while operating costs jumped 3.6% year over year. Weak store sales and a shift toward online sales are no doubt hurting the company's margins.
While Bed Bath & Beyond stock had recovered most of its losses by midday, the retailer's results were nothing to get excited about. In the age of e-commerce, the company is clearly still struggling to find its footing.