Bed Bath & Beyond (BBBY  ) was down more than 20% following the company's fiscal Q2 earnings. The retailer is doing a U-turn of sorts as the share price had climbed from under $4 to over $50 from April 2020 to January 2021. Since then, share prices have fallen to a low of $14.

Many of the issues that negatively impacted the company wouldn't be surprising for anyone who has been paying attention to the news. Store traffic was declining, while the company's inventory and sales were crimped by supply chain issues. As a result, the company lowered its revenue and earnings outlook for the rest of the year, warned of rising costs, and issued Q3 guidance below analysts' estimates.

Inside the Numbers

In Q2, the company earned $0.04 per share, badly missing expectations of $0.52 per share. Revenue also fell short at $1.99 billion vs. $2.06 billion expected and was a sharp drop from last year's $2.7 billion. Overall, the company lost $73 million in the quarter which was a sharp turn lower from its income of $218 million in last year's fiscal Q2.

The company's turnaround strategy involved shuttering certain locations, remodeling stores, and launching in-house brands for a variety of items including towels, cooking utensils, and decorations. This initially sparked an increase in sales but they have tapered off in recent quarters.

The company is attributing this to coronavirus fears and noted a drop in sales in areas with rising cases. This led to a weaker than normal back to school season for all retailers including Bed Bath & Beyond. Another issue for the retail industry is that inventories are smaller than normal, while shipping costs and transit times have increased.

These challenges are evident in the company's Q3 guidance as it expects EPS between breakeven and $0.05 per share and sales between $1.96 billion and $2 billion. Both are below expectations of $0.28 per share and sales of $2.02 billion.

Stock Price Outlook

Another issue clouding the outlook for retail stocks like Bed Bath & Beyond is that the outlook for consumer spending is getting worse especially with rising rents and gas prices. Due to these issues, investors should be patient given these considerable challenges.

However, some short-term bounce is certainly possible given that coronavirus cases are dropping, this could help supply chain issues and port backlogs get sorted out, and the stock is very oversold.