Lululemon Athletica Inc (NASDAQ:LULU) saw its shares drop more than 17% in premarket trading Friday after the athletic apparel retailer trimmed its full-year outlook, overshadowing a second-quarter earnings beat.
For the quarter ending July 28, Lululemon reported earnings of $3.10 per share, surpassing analysts’ consensus of $2.87. Revenue came in at $2.53 billion, slightly below the $2.54 billion estimate.
Looking ahead, the company forecast third-quarter earnings of $2.18 to $2.23 per share and revenue of $2.47 billion to $2.50 billion, both falling short of Wall Street expectations of $2.90 and $2.56 billion, respectively.
Full-year earnings guidance was slashed to a range of $12.77 to $12.97 per share, down from $14.58 to $14.78, versus analysts’ average estimate of $14.61. Revenue expectations were revised to $10.85 billion–$11 billion, lower than the previous $11.15 billion–$11.30 billion forecast and below the $11.2 billion consensus.
CEO Calvin McDonald pointed to the contrast between international strength and domestic weakness. “We are disappointed with our U.S. business results and aspects of our product execution,” he said.
“We have closely assessed the drivers of our underperformance and are continuing to take the necessary actions to strengthen our merchandise mix and accelerate our business,” McDonald added in the company’s release.
Analysts remained cautious. Raymond James reiterated its Market Perform rating, highlighting that Lululemon “remains a ‘show me’ story that needs to drive better and more durable domestic growth, which is critical to estimates and the narrative.”
Barclays analysts also maintained a neutral stance, citing “the outsized number of issues impacting LULU” but noting the company’s “still-strong international growth and resilient market share gains in performance apparel.”
Lululemon Athletica stock price
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