Bed Bath & Beyond may be headed for a quicker-than-expected demise if the company doesn't shake things up, Anthony Chukumba, managing director and senior research analyst at Loop Capital Markets, told CNBC.
Bed Bath & Beyond "should be more aggressive in closing stores" and building its online presence, he said.
Its stock plunged more than 18 percent on Thursday after the home goods retailer issued a weak 2018 forecast.
While Chukumba acknowledged that the company is still profitable, generating positive cash flow and having a "relatively under-leveraged balance sheet," he said it is not closing stores fast enough to continue competing in the digital world.
"They have talked about closing 40 core Bed Bath & Beyond stores this year. I don't think that's enough," he said. "And they're actually going to open about 20 Buy Buy Baby and Cost Plus stores."
Bed Bath & Beyond is parent company to both Buy Buy Baby and Cost Plus.
"The problem is that [Bed Bath & Beyond] sells a lot of commodity products, nationally branded products that you can find at other places and in many cases for less," Chukumba said.
In a quarterly, in-house pricing study, Loop Capital Markets found that Bed Bath & Beyond is about 18 or 19 percent more expensive than e-commerce giant Amazon. Bed Bath & Beyond has long been offering coupons of 20 percent off to lure shoppers into stores. But Chukumba said that has only caused margins to drop "a countless number of quarters year over year."
Bed Bath & Beyond stock has declined 23 percent in the last month, 55 percent in the last year, 76 percent down in three years and 74 percent in the last five years.
Still, Chukumba has a hold rating on the stock rather than a sell.
"We're just not sure there is significant additional downside here, at least over the next 12 months," he said of the discounted stock, which closed at $17.21 on Thursday.
"They're not going away anytime soon," he said.
Bed Bath & Beyond could not be reached immediately for comment.