Lululemon Athletica Inc. shares plunged to the lowest level in more than three years after the apparel maker cut its earnings forecast and dealt with a public feud between its founder Chip Wilson and the company’s board.
The stock fell almost 15% to $37.66 Thursday morning after Lululemon said annual earnings will be $1.71 to $1.76 a share, down from an earlier projection of $1.80 to $1.90. Revenue will be $1.77 billion to $1.8 billion, down from a prior estimate of $1.82 billion.
Estimated second-quarter profit will be 28 cents to 30 cents a share. Revenue will be $375 million to $380 million, less than the $387 million that Wall Street expected.
The company also reported a tax-related drop in fiscal first-quarter earnings stemming from a plan to buy back up to $450 million in shares.
First-quarter profit was $19 million, or 13 cents a share, compared with $47.3 million, or 32 cents, a year earlier. Revenue was up 11% to $384.6 million, but same-store sales increased just 1%. In-store sales decreased 4%.
The yoga-wear maker also announced that finance chief John Currie will resign at the end of the fiscal year.
Laurent Potdevin, who was named chief executive in December, tried to reassure investors that 2014 is a transition year following Lululemon’s string of headline-grabbing problems.
“Despite a reduced outlook, I am confident that the work we are doing today will only enhance our premium positioning,” he said.
Once a top player in athletic wear, Lululemon is grappling with the fallout from last year’s recall of 17% of its Luon yoga pants for being nearly transparent.
The crisis was exacerbated when Wilson made comments that seemed to blame the problems on overweight customers whose thighs rubbed together too much. That rankled its strong base of female customers.
The problems eventually resulted in the resignation of Christine Day, its once-popular CEO.
Lululemon's results come a day after Wilson, who owns 27% of the company, announced he had voted against the re-election of its new chairman and another board member.
He issued a statement criticizing the board for supposedly being too focused on short-term growth. The company quickly responded with a statement of its own.
Internal feuding over the brand’s direction has marred Lululemon’s reputation. Wilson, who resigned as chief executive in 2005 but remained on the board, often has clashed with others, including Casey and Day.
The flubs have opened the door for competitors, such as Gap Inc., Nike and Lorna Jane, which offer cheaper prices for similar designs.
Potdevin told investors earlier this year that the company - which helped create an extremely lucrative athletic and yoga-wear market - was "not the only game in town anymore."