Bed Bath & Beyond (NASDAQ:BBBY) stock fell as much as 3% in after-market hours when the company reported unimpressive second-fiscal-quarter results. The pullback added to the stock's 5% decline in the five days leading up to the report, and a 22% decline year to date.

While Bed Bath & Beyond's low valuation multiples, meaningful free cash flow, and share repurchase programs give the company some value-stock characteristics, investors following the company are looking closely for signs it can moderate the negative effects of heightened competition, and an evolving retail environment where e-commerce is increasingly critical. Unfortunately, Q2 doesn't look like it will be the quarter that will offer those signs.

Image source: Bed Bath and Beyond.

The results
Bed Bath and Beyond reported earnings and revenue of $1.21 and $3 billion -- both in line with analyst expectations. These results compare to $1.17 and $2.9 billion in EPS and revenue during the year-ago quarter.

To get a better picture of the competitive nature of Bed Bath & Beyond's business, investors should note that its Q2 net income was actually down from the year-ago quarter, falling from $224 million to $202 million. The contrasting trajectories of Bed Bath & Beyond's EPS and its net income are due to its ongoing share repurchases. Between its most-recent quarter and the year-ago quarter, total diluted shares outstanding decreased from about 191 million to 167 million, or 12.5%.

But the company's same-store sales growth was lower than expected, at 1.1% on a constant-currency basis. Analysts, on average, were expecting same-store sales of 2.2%. The quarter's same-store sales growth was even lower than what Bed Bath & Beyond was modeling for. The company said in Q1 that it expected Q2 same-store sales in the range of 2% to 3%.

Bed Bath & Beyond has also lowered its expectations for same-store sales for the rest of the year, broadening its expected range of 2% to 3% growth to 1% to 3% growth.

Competitive pressure was also clearly evident by reviewing its reported gross profit margin. The company continued to see its gross profit margin narrowing, although this wasn't a surprise; management has indicated that a slight sales shift away from some of its higher-margin retail categories toward lower-margin categories is weighing on profitability. Further, investments  in technologies to help it better compete in a fast-changing retail environment -- technologies like improved point-of-sale systems and updates to its website and mobile app -- are also putting pressure on the company's gross profit margin.

Bed Bath & Beyond's second-quarter gross profit margin was 38%, down about 50 basis points from its year-ago gross profit margin of 38.5%. Gross profit margin also fell about 10 basis points sequentially.

On the bright side, the company reaffirmed its commitment to repurchasing shares, announcing a $2.5 billion repurchase program, up 25% from its previous $2 billion repurchase program. The company plans to commence the new program after its existing program is completed.

The remaining balance for the current program is approximately $305 million -- enough to last one to two quarters based on its current quarterly spending on repurchases. The board anticipates funding the program from current cash and future cash flows.

Daniel Sparks has no position in any stocks mentioned. The Motley Fool recommends Bed Bath & Beyond. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.