Baby Superstore plunged 14 1/4, to 34 7/8, after the company said it might have restated its cash balances for the last year.

Baby Superstore, when it went public two years ago, was supposed to be a "category killer" retailer, one that would leave competitors reeling.

But Baby Superstore is the first and the biggest to take on the highly fragmented children's market.

But analysts said Baby Superstore had little choice but to pursue an aggressive expansion.

In Nasdaq trading, shares of Baby Superstore jumped $5, to $24.875.

Baby Superstore slumped 10 5/8, to 24 1/2, on weaker-than-forecast first-quarter earnings.

Baby Superstore's shares fell $14.25, closing at $34.875 in heavy Nasdaq trading.

Baby Superstore did not disclose other details of its accounting.

Baby Superstore was one of 1994's hottest initial public offerings.

Baby Superstore said its gross margins fell to 27.8 percent of sales, from 28.9 percent a year earlier.