By Nick Kostov
WPP PLC shares tumbled as much as 20% in early London trading after the world's largest advertising group cut its full-year guidance and posted disappointing third-quarter results, underscoring the challenges facing new chief executive Mark Read.
The British company, which owns agencies including J. Walter Thompson and Group M, said like-for-like net sales--a key measure of its operating performance--fell 1.5% for the quarter ended Sept. 30. Analysts had expected a 0.4% rise.
The company said it now expects annual like-for-like net sales to fall by between 0.5% and 1.0%. Previously, the company had expected like-for-like net sales to show trends similar to the first half, when like-for-like revenue rose 1.6% on the year-earlier period and comparable net sales were up 0.3%.
WPP warned on its Thursday earnings call that 2019 would also be challenging.
Most recently, London-listed shares of WPP were down 15% at 899.30 pence. The FTSE 100, of which WPP is a component, was 0.4% lower.
Mr. Read took WPP's helm in September, after the company was rocked by the sudden departure of longtime CEO and founder Martin Sorrell in April.
On Thursday, Mr. Read said WPP could return to growth, despite the disruption hitting the ad industry, with increased competition from consulting firms, marketers cutting back on the fees they pay ad agencies and changes in consumer behavior.
"We are clearly underperforming our competition, it's something we are aware of and it reinforces our determination to take action to invest in the business and make the changes we need to make," he said.
First, he will need to stop the drumroll of account losses in recent weeks. Ford Motor Co., one of the firm's largest clients, switched its creative duties to rival Omnicom Group Inc. in October and companies including American Express Co., PepsiCo Inc. and Daimler AG's Mercedes-Benz have moved business away from WPP recently.
The company is selling assets to reduce its debt-to-earnings ratio and simplify its sprawling operations. In Thursday's statement, WPP confirmed it will seek to unload a stake in its underperforming market-research unit Kantar Group, in what would be the largest sale since Mr. Read took over as CEO. Analysts at Kepler Cheuvreux valued the unit at between EUR3 billion ($3.4 billion) and EUR4 billion in December.
"Sentiment around WPP has been very weak, but hopefully this move will help restore some confidence and part-repair a creaking balance sheet," said Alex DeGroote, founder of media consultancy DeGroote Consulting.
WPP's peers reported sales numbers that were well received by the market last week, with organic sales growth for the third-quarter ranging from 1.3% at French rival Publicis Groupe SA to 5.4% at Interpublic Group of Co.
Mr. Read said Thursday that the issues WPP is experiencing "are company-specific to some extent."
He has been reorganizing WPP's business in the hope of making it more nimble and investing in companies that appear to be tech-savvy. On Wednesday, WPP said it was consolidating health care agencies into Ogilvy, Wunderman and the recently merged VMLY&R creative agency.
"We have great strengths within the group, we just need to do a better job at making it simpler for clients to access it," said Mr. Read, adding it would "take some time" to see the results of his strategy.
Again this quarter, WPP said a weakening of its businesses in North America and in its creative agencies dragged down the group's third-quarter performance. In North America, like-for-like net sales dropped 5.3% on the comparable quarter a year earlier.
"We do have strong creative talent, we just need more of it," said Mr. Read, who said the company wouldn't rule out acquisitions in this area although such deals would most likely focus on technology.
Overall revenue declined by 0.8% to GBP3.76 billion ($4.85 billion) for the third quarter compared with GBP3.79 billion in the year-earlier period.
WPP also announced Thursday its longtime Group Finance Director Paul Richardson will retire in 2019.
The company is set to provide another strategy update in December.
Adria Calatayud contributed to this article.
Write to Nick Kostov at Nick.Kostov@wsj.com and Lara O'Reilly at email@example.com