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Bed Bath & Beyond Inc. (BBBY) - Get Bed Bath & Beyond Inc. Report shares traded sharply lower Monday after analysts at Barclays lowered their rating on the stock, while cutting their price target, amid concerns the home retailer is struggling to increase customer traffic and improve its profit margins.

Barclays reduced its rating on Bed Bath & Beyond to underweight from equal weight, and clipped its price target by $2 a share to $13 each, citing "limited, if any" visibility in the group's ability to improve trends in customer traffic. Lead analyst Matthew McClintock also cautioned that he's "less than optimistic' the company can hold the line on its declining profits margins.

"We have remained on the sidelines over the past several years as the company has attempted to work through a broad restructuring, but we are increasingly disappointed with the results of these efforts." Barclays said. "We believe there is limited, if any, visibility into a potential inflection point towards improving traffic trends and are less than optimistic that gross margin can stabilize in the foreseeable future." 

Bed Bath & Beyond shares were marked 5.2% lower in early Monday trading and changing hands at $15.82 each, a move that would still leave the stock with a 28.8% gain over the past three months.

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Bed Bath & Beyond posted stronger-than-expected quarterly earnings and reaffirmed guidance for its full fiscal year, adding it will arrest a slowdown in comparable store sales, which fell around 1.8% over the final three months of the year, to a "low single-digit" slowdown in 2019.

Bed Bath & Beyond said net income for the three months ending in November, the company's fiscal third quarter, fell nearly 60% to 18 cents per share, but beat the consensus forecast by a penny. Group sales, however, rose 2.7% from the same period last year to just over $3 billion, even as comparable store sales fell for the seventh consecutive quarter.

"Next year, we believe that to a greater degree, we'll be able to leverage a lot of the investments that we've been making both in technology and in people to be able to enhance the profitability," CEO Steven Temares told investors on a conference call in early January. " It's not a cost-cutting exercise for us ... this is a natural evolution for us from all these investments that we've been making."

McClintock, however, thinks it will be "highly difficult for the company to build a home furnishing/decor business, which appears to be a critical factor in the ultimate success of a turnaround", given the intensifying competition from new market entrants like Amazon (AMZN) - Get Amazon.com, Inc. Report and Home Depot (HD) - Get Home Depot, Inc. Report and the difficulty in building brand awareness for some of its new private label offerings in a declining traffic environment.

"We believe the Bed Bath and Beyond story is hinged solely on the success of their home furnishing/decor business to drive traffic and sales to turnaround the company," Barclays said. "Additionally, Bed Bath and Beyond is also trying to capture market share from stores, such as Ikea, who have mass brand recognition and a bigger box to show drastically more (product) inside their stores."