Freshii Inc. fell the most on record after the quick-service restaurant chain slashed its store-opening forecast for the current fiscal year and its earnings guidance for 2019, citing an overly ambitious schedule that proved to be impossible to meet.

The shares tumbled as much as 40 percent before closing down 35 percent at $5.75 in Toronto, half the January IPO price of $11.50. Trading volume was more than 30 times the full-day average of the past three months.

Freshii said it now expects to open 90 to 95 net new stores in 2017, down from an earlier forecast of 150 to 160. For fiscal 2019, the company expects to open 730 to 760 stores, down from 810 to 840. It also cut its 2019 system-wide sales forecast to $275-million to $285-million, down from an earlier outlook of $355-million to $365-million, and now sees adjusted EBITDA (earnings before interest, taxm depreciation and amortization) of $15-million to $17-million, down from $20-million to $22-million.

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"Today's announcement is extremely disappointing to me," Freshii chief executive Matthew Corrin said on a prerecorded call. "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."

The company blamed the end of a partnership with Target Corp., which saw the closure of 18 restaurants, delays to multi-unit franchisee store openings, and "unforeseen challenges" from a far greater number of net new store openings relative to 2016.

Mr. Corrin said Freshii "learned a lot from this experience" and has taken several steps to address the delays.

CIBC analyst Mark Petrie cut his rating on the stock to neutral from outperform and reduced his price target to $9 from $14. As of Monday, the stock had seven buys, three holds and no sell recommendations.

Credibility 'crippled'

"Disappointing 2Q results and confusing communication had already crippled credibility with investors, and this clearly compounds the issue," Petrie wrote in a note. "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 Capital Markets cut its rating to sector perform from outperform and reduced its price target to $8 from $12.

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"We believe FRII's trading multiple prior to the guidance revisions already reflected a degree of uncertainty in the company's ability to meet its previous targets," RBC analyst Sabahat Khan wrote in a note, using Freshii's stock ticker. "The guidance revision is likely to exacerbate investor concerns."