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, investmentsĀ  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.