What happened

Shares of Bed Bath & Beyond (BBBY) were pulling back today after the struggling home furnishings retailer issued a disappointing second-quarter earnings report.

As of 12:04 p.m. ET, the stock was down 4.5%.

So what

Bed Bath & Beyond continued to see sales erode in the quarter as comparable sales fell 26% and revenue dove 28% to $1.44 billion, missing analyst estimates at $1.47 billion.

Adjusted gross margin was down sharply from 34% to 27.7% as the company has been aggressive in marking down merchandise due in part to higher-than-normal inventory levels.

On the bottom line, the results were also ugly, as the company had an adjusted EBITDA loss of $168 million, compared to a profit of $85 million in the quarter a year ago. Its adjusted net loss was $256 million, or $3.22 per share, a loss much worse than the consensus at $1.85.

Bed Bath & Beyond had already given a preliminary earnings report at its investor update at the end of August, but investors were still turned off by the final results.

Interim CEO Sue Gove did see a glimmer of improvement in the company's performance, saying, "While our sales and profit results do not yet reflect the strategic and financial actions, we have initiated to change our performance, they do demonstrate sequential progress in several key areas."

Now what

The company is aggressively cutting costs, aiming for $500 million in annualized expense reductions, as the business need is currently hemorrhaging cash. It maintained the full-year guidance it announced a month ago, calling for a sequential improvement in comparable sales in the second half of the year, but still sees full-year comps falling 20%. 

Bed Bath & Beyond had $850 million in liquidity as of the end of the quarter and said it expected to break even on an operating cash flow basis by the end of the year. 

That would be a significant step in its turnaround, but a return to growth still seems difficult, especially in the current macroeconomic environment. Cost-cutting alone will not be enough to return the business to health, meaning the stock likely has further to fall.