(Reuters) - Shares of Bed Bath & Beyond Inc (O:BBBY) were on pace for their worst day ever on Wednesday, as disappointing sales numbers raised concerns on Wall Street that the retailer's turnaround would take longer and be much tougher than anticipated.
Analysts were hoping the home furnishing chain's new Chief Executive Officer Mark Tritton to quickly overhaul the business after almost three years of falling same-store sales through divestitures, cost cuts and a revamp of merchandise.
But after Bed Bath & Beyond's Tuesday announcement of a 5.4% drop in same-store sales from the first two months of its fourth quarter due to increased promotions and falling store traffic, Wall Street dimmed its expectations.
"Tritton has a more difficult job ahead than we anticipated and more aggressive changes are needed. We are disappointed with the large step back in the business," analysts at Telsey advisory group wrote in a note.
Telsey said consumers were not responding well to Bed Bath & Beyond's products and pricing, and lowered its price target on the company's stock by $3 to $15. At least four other brokerages cut their price targets to as low as $10.
Bed Bath & Beyond's warning of a torrid final quarter comes just a little over a month after it withdrew its forecast for fiscal 2019.
"We are experiencing short-term pain in our efforts to stabilize the business, including the pressures of store traffic trends coupled with our own executional challenges," Tritton, a former Target Corp (N:TGT) executive, said on Tuesday.
Only five out of 18 Wall Street brokerages rate Bed Bath & Beyond's stock "buy" or higher. Ten rate it "hold" and 3 "sell".
The unusual mid-quarter sales announcement also led to a plunge in earnings expectations with Refinitiv's fourth quarter SmartEstimate falling to 20 cents per share on Wednesday, compared with $1.05 per share before Tuesday.
"Looking ahead, competition remains intense from both online and physical retailers, and it will take significant work to reposition the business to remain viable," KeyBanc Capital Markets analyst Bradley Thomas said.
Shares of the company fell 24.4% to $11.22 in premarket trading.