"Bombay's been stinking for a while," says Seth Jayson in his late-August take on home-furnishings retailer Bombay (NYSE:BBA), "but it can always get worse." Sure enough, it did: Yesterday, after the market's close, the Ft. Worth, Texas-based retailer said August revenues fell 6% while same-store sales dropped a stunning 19% -- down from an 18% gain a year ago.

You have to read the press release pretty carefully for things about which to be optimistic. Bombay's "non-store" operations -- the Amazon.com (NASDAQ:AMZN) fueled Internet, for example -- seem to be doing better and represented more of the company's sales than it did last August. Management says new merchandise has provided some pop in recent weeks. And same-store sales are seen improving from August levels this month, for what that's worth.

Where to point the blame? Well, if the housing market slows, you can be sure that it will be bad for business at Bombay. But things aren't so bad at some of Bombay's competitors and comparables at different points on the product and price scale: We've recently seen good signs from upmarket Williams-Sonoma (NYSE:WSM), Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) taking stock in Pier 1 (NYSE:PIR), and continued performance from Bed Bath & Beyond (NASDAQ:BBBY). It can't be all environmental.

And it isn't. Bombay had a pretty good 2003 but since then has had trouble getting its merchandise mix right in recent periods. It's shown up in drastically damaging results in virtually all its markets. (The company has stores in most of the United States and Canada.) Investors haven't taken to management's misses well: The company market value has fallen steeply since last year's holiday season.

However, I can't say I'm surprised. For most of 2004, that inventory hasn't sold well, and the cash has been heading out -- not in -- the proverbial window. If the company can't get things right by the all-important holiday season, investors will do the same.

Fool contributor Dave Marino-Nachison doesn't own any of the companies in this story.