Dive Brief:

• Bed Bath & Beyond on Wednesday reported second quarter earnings of $167.3 million or $1.11 per share, on revenue of $2.98 billion, down from $201.7 million, or $1.21 per share, on revenue of $2.99 billion in the year-ago quarter. That missed FactSet analyst estimates of $1.16 per share on sales of $3.05 billion in the quarter. Shares fell 2.9% late Wednesday following the report.

• Same-store sales overall fell 1.2% in the second quarter compared to last year’s 0.7% rise, Bed Bath & Beyond said. But the home-goods retailer's online sales grew more than 20%.

• Bed Bath & Beyond's reduced free shipping threshold of $29 and increased rate of redemption of its famous blue coupons both impacted margins during the quarter, CFO Sue Lattmann said on a conference call with analysts Wednesday.

Dive Insight:

Bed Bath & Beyond operates 1,533 stores across all brands, and although other struggling retailers like Macy's are shuttering significant numbers of brick-and-mortar locations and investing in digital efforts, Lattmann said Wednesday that the retailer instead will be opening 30 new stores across all concepts and closing just 15 stores — another net increase.

But while Bed Bath & Beyond's same-store sales missed expectations, its online sales rose dramatically, and despite many retailers and observers continuing to treat those channels as separate phenomena, there’s evidence that e-commerce can be abetted by physical locations. In fact, Moody’s Investor Service last week detailed brick-and-mortar retailers that are successfully leveraging their physical operations to support e-commerce, cautioning that closing a physical location reduces a retailer’s presence in the market area, and noting that online sales often decrease in zip codes surrounding a shuttered store.

Bed Bath & Beyond also hasn’t yet fully integrated its new One Kings Lane effort, a brand that could eventually help the chain online and off. One Kings Lane could help the retailer with what is probably its biggest problem: Much of its merchandise has morphed into commodities — products that can be found in so many places that price becomes the biggest differentiator and loyalty becomes hard to protect. 

To that end, Bed Bath & Beyond this week launched the One Kings Lane collection, a line of proprietary furniture and lighting, CEO Steven Temares said on a conference call with analysts.

Temares also emphasized the company’s work to differentiate its product lines, citing proprietary or exclusive brands like Wamsutta, Olivia and Oliver, and ED by Ellen DeGeneres. Bed Bath & Beyond is additionally growing its assortment of private label health and beauty care products under the Harmon Face values label.

“Differentiation and constant improvement are paramount for us, and this also applies for the services and solutions we provide,” Temares said, adding the company is featuring images of “experiences” on its site curated by professional designers.