Lululemon Athletica Inc. warned investors January 13 that a substantial drop in sales since the start of 2014 will hurt sales and earnings in its fourth quarter – an outlook that sent the yogawear maker’s shares (Nasdaq:LULU) down 16% as of 11:30 a.m. Pacific time.
Lululemon now projects sales to be in the US$513 million to US$518 million range in the quarter that ends February 2. That’s down from earlier sales estimates of US$535 to US$540 million.
Profit estimates were similarly down with the company now expecting to generate US$0.71 to US$0.73 per share, down from US$0.78 to US$0.80 per share in the quarter.
“We're on track to deliver on our sales and earnings guidance through the month of December; however, since the beginning of January, we have seen traffic and sales trends decelerate meaningfully,” said chief financial officer John Currie.
The revised guidance comes as Lululemon pivots under new executive leadership.
Lululemon announced December 9 that former Toms Shoes president Laurent Potdevin is replacing Christine Day as CEO. The company also announced that longtime board member and former Starbucks executive, Michael Casey, would replace founder Chip Wilson as chair of the company’s board of directors.
Wilson was in the spotlight last year when he said in a TV interview that Lululemon’s some women’s bodies “just don’t actually work” for Lululemon clothing. He then apologized to executives, staff and investors for the controversy that he caused but did not apologize for the actual remarks.
At press time, Lululemon shares were down 16.48% US$9.78 at US$49.82.
