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Lululemon Athletica Scales Back Full-Year Sales And Profits Outlook

Sep 12, 2013 01:24 PM EDT | By Justin Stock
Lululemon Athletica, Lulu Yoga Pants, Nasdaq
Lululemon Athletica
Lululemon Athletica is expected to expand in other international regions.(Photo : Creative Commons)

Lululemon Athletica scaled back its outlook for full-year sales and profits Thursday decreasing its shares.

According to Reuters, the yoga wear retailer cut its forecast for full year earnings per share to $1.94 to $1.97 from $1.96 to $2.01. 

This is a decrease from when the company thrived and its numbers increased ten percent or more from one quarter to another.  

Lululemon's shares dropped seven percent to $64.09 on Nasdaq although results for the second quarter were better than what analysts estimated.

The company did not begin the third quarter on a strong note because deliveries for its fall inventory were late due a recall. The company's signature item of Luon pants were pulled from the shelves on March 18 after it was discovered the pants were see through. Chief product officer left in April, further hindering the company's reputation.

Former company chief executive officer Christine Day, who announced in June she was going to leave her position once a replacement was found, said the company is currently conducting a search.

"The search committee is in discussion with several high-caliber candidates and in the coming months expects to narrow the list to the final candidate," Day said on an analyst call Reuters reported.

The delay will be a factor in delayed deliveries for the rest of the year, and would cost the company $40 million to $45 million Reuters reported.

"We believe investors are mis-valuing this equity based on the assumption that the company's current operating margins (mid 20s) are sustainable compared to an industry average in the low teens. Buckingham Research Group analyst John Zolidis said in a client note, Reuters reported.

Lululemon is based in Vancouver, British Columbia and makes form-fitting yoga pants.

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