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zulily55The day after Zulily reported disappointing first-quarter results and slashed its outlook for the year, investment banks are questioning whether the Seattle e-commerce company can turn things around.

After a miss like this, it’s natural for analysts to cut their price targets and downgrade their ratings, but those actions were mild compared with what they had to say: One apologized for making a “horrific call” on the stock, and another summarized the situation by saying “The Lily is wilting.”

The harsh words only paint part of the picture.

Immediately after yesterday’s report, Zulily’s shares collapsed, tanking by 17 percent. Today, the situation is slightly better, with shares closing down only 8.4 percent, or $1.00, to $10.82 a share. But that’s way off the company’s 52-week high of $42.56.

zulily year stock performanceIn a note to investors, Stifel analysts apologized for initiating coverage in January with a “buy” rating and a $30 price target. “We were wrong. Sorry,” reports MarketWatch. “We thought Zulily could become a modern-day QVC/HSN. We didn’t realize Zulily would have this much trouble with the curve.”

Today, Stifel downgraded its rating to “hold” and lowered its price target to $12.

Yesterday, Zulily reported first-quarter sales of $306.6 million, which was at the low-end of the company’s guidance. Analysts had been projecting revenue of $313 million. In addition, it said 2015 revenues were now expected to fall between $1.3 and $1.4 billion, down from its previous guidance of $1.5 and $1.65 billion.

In a separate note, RBC Capital Markets told investors it was dropping its price target to $12 a share: “The Lily is wilting,” the analyst wrote. It added that Zulily’s shares deserved to collapse because revenue growth had fallen, too — from 52 percent in the fourth quarter to 29 percent in Q1.

Citigroup also reacted to the news, by cutting its price target to $13 from $17 and maintaining its “neutral” rating.

This was not the first signs of trouble.

In February, the company said Zulily CFO Marc Stolzman was leaving the company after the company missed fourth-quarter earnings. At the time, Zulily co-founder Mark Vadon blamed its problems on growing pains. “We have been growing so fast that, at times, we’ve let execution be more wobbly than it should be,” he said, noting that the company planned to fix those issues in 2015.

During yesterday’s call with analysts, the company’s CEO Darrel Cavens outlined its plan.

zulily logoZulily is a flash sales site, selling heavily discounted apparel and home goods to mostly moms. Each day, the company lists a different selection of items that will be available for a short period of time.

Zulily said it was reducing the number of items it is selling every day to “100 events,” was shifting its marketing strategy to a longer-term approach that advertised the service — not necessarily an individual sale — and was continuing to improve its shipping times, which have been a sore point for a while.

“I think we’re moving in the right direction and have made significant progress on improving the customer experience, but believe there is much more opportunity and work to be done,” Cavens said, during the call. “As we work through these changes, we expect to see a lower growth in the near-term, but believe in an opportunity to expand growth more strongly long-term.”

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