Vancouver yogawear purveyor Lululemon Athletica Inc. reported its fiscal 2016 earnings after the close of stock markets March 28 and revealed that it missed analyst expectations and expects its first quarter, same-store sales to falter.
Investors did not like the news and sent the company’s shares (NYSE:LULU) down more than 23% to new 52-week lows. The shares were trading at US$51.03by around 10:40 on March 30 after having been 4.11% to US$66.30 the previous day.
Lululemon generated US$136.1 million, or US$0.99 per share in the fourth quarter, which ended January 29, on US$789.9 million in sales.
The consensus of Thompson Reuters analysts was for Lululemon to generate US$1.01 per share on US$783.6 million in revenue.
Despite this, Lululemon ended its fiscal year with overall sales increasing 12% and operating income rising 18%.
Lululemon CEO Laurent Potdevin said in a press release that the start to 2017 was "slow."
GlobalData Retail managing director and analyst Neil Saunders, however, seemed willing to cut Lululemon some slack.
“Admittedly the overall sales gain was slightly softer than that posted during the prior quarter, but this is mostly a function of a more challenging prior year comparative,” he said.
“Pleasingly, comparable sales growth was sequentially better than during the third quarter.”
Despite what Saunders considered to be a "success" in Lululemon’s final quarter, he sees a mixed outlook on the horizon, particularly the first part of the 2017 fiscal year.
“Lululemon is now coming up against tougher comparatives which will make growth more challenging,” he said.
“Moreover, it will have to contend with the saturation of a slowing athleisure market. These things will take the edge of growth and may mean that Lululemon struggles to increase its comparable sales.”
