FRESHII HAS PROMISED A BIT MORE THAN THEY CAN DELIVER.

it now expects to open 90 to 95 net new stores in 2017, down from an earlier forecast of 150 to 160. Freshii estimates there will be 369 to 376 Freshii stores open systemwide by December.

“We did not anticipate that entering so many new markets all at the same time would impact our typical nine-month timeline from the execution of a franchise agreement to the opening of a store,” Matthew Corrin, expects to open 730 to 760 stores, down from 810 to 840. It also cut its 2019 system-wide sales forecast to US$275 million to US$285 million, down from an earlier outlook of US$355 million to US$365 million.

In June, Montreal-based David’s Tea scaled back its growth projections for the U.S. market as it tried to better understand its consumers south of the border, who prefer ice tea to hot tea and go for sweeter flavours than Canadians do.

On Monday, Freshii also blamed its outlook on the ending of its once-vaunted partnership with Target, resulting in 18 restaurant closures within the mass merchant’s stores.

“The sales levels of these locations did not support a continued investment of resources by both parties,” Freshii said.

Freshii’s shares closed down $3.11 to $5.75 on Tuesday, a decline of 35 per cent, and far below the company’s January initial public offering share price of $11.50.

“Disappointing (secondquarter) results and confusing communication had already crippled credibility with investors, and this clearly compounds the issue,” CIBC analyst Mark Petrie in a note to clients. “While we believe the consumer and franchisee propositions remain attractive, and see 2019 guidance as achievable, the near term presents too much uncertainty to recommend the stock today.”

RBC analyst Sabahat Khan said the restaurant chain’s trading multiple prior to Monday’s guidance revision “already reflected a degree of uncertainty in the company’s ability to meet its previous targets,” he wrote in a research note. “The guidance revision is likely to exacerbate investor concerns.”