Lululemon Athletica Inc. saw its shares plummet after releasing an earnings report that revealed the company is struggling to maintain its previous growth trajectory. The yogawear retailer, known for its athletic apparel and accessories, has revised its financial outlook downward, triggering investor concern. Lululemon designs, distributes, and retails athletic apparel and accessories. Its products, which range from yoga pants to outerwear, are sold through company-owned stores, online, and through wholesale accounts.
The company now projects third-quarter sales to fall between $US2.47 billion ($3.8 billion) and $US2.5 billion, a figure below Wall Street expectations. This revision reflects concerns about the company’s performance in the US market and challenges with product execution, according to chief executive Calvin McDonald. The updated forecast has led to a significant market reaction, with investors reassessing the company’s growth prospects.
Lululemon has also adjusted its full-year outlook, reducing its earnings per share (EPS) estimate to a range of $US12.77 to $US12.97, a considerable drop from the initial projection of up to $US14.78. Similarly, the retailer has lowered its net revenue forecast for the full year, now anticipating figures between $US10.85 billion and $US11 billion, down from the earlier estimate of up to $US11.3 billion provided in the first quarter.
As of 4.20pm in New York on Thursday (6.20am on Friday AEST), Lululemon’s shares had fallen by more than 13 per cent, reflecting the market’s negative response to the revised financial outlook. The company faces pressure to address the issues impacting its US business and to improve its product strategy to regain investor confidence and return to its previous growth levels.
