Lululemon shares tumble after yoga pants maker slashes forecast
Lululemon Athletica Inc. indicated that it may keep paying for last year’s missteps well into 2014, cutting its financial forecast for the fiscal fourth quarter ending on Feb. 2.
The Vancouver, Canada, yoga apparel maker — with a new chief executive at the helm and fresh off a new round of complaints about too-sheer pants — said that revenue in the current quarter would likely come in between $513 million and $518 million.
The company previously projected $535 million to $540 million in revenue.
Lululemon also scaled down its profit projection to a range of 71 cents to 73 cents a share, down from a range of 78 cents to 80 cents.
Analysts such as Liz Dunn of Macquarie Capital called the announcement “a particularly negative surprise.” Dunn said she suspects that same-store sales suffered a double-digit tumble in January.
Wall Street analysts on average had expected Lululemon to turn earn 79 cents a share in the quarter.
“Since the beginning of January, we have seen traffic and sales trends decelerate meaningfully,” Chief Financial Officer John Currie said in a statement Monday.
With about two hours left in Monday’s regular stock-market trading, Lululemon was down $9.88, or 17%, to $49.72.
Last month, Lululemon named Laurent Potdevin, president of Santa Monica shoe company Toms, as its new chief executive. At the same time, founder Chip Wilson said he would resign as the yoga maker’s chairman this summer.
Wilson had infuriated many customers when he said last fall that “some women’s bodies just actually don’t work” in the chain’s popular yoga pants.
The items were accused several times last year of being too sheer. Such complaints sparked a massive recall in March.
“While we realize that it will require continued investment and time to get to best-in-class status, with our new leadership in place we are very focused on building on this stronger foundation to execute our long-term growth strategies,” Currie said Monday.
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