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What: Shares of lululemon athletica (LULU 0.71%) were getting tied up in a knot today, closing down 12% after posting disappointing guidance in its quarterly report.
So what: Despite the drop in share price, the yoga apparel retailer beat estimates in the third quarter, posting a per-share profit of $0.45 against estimates of $0.41. Revenues improved 20% to $379.9 million, better than expectations of $376.3 million, and same-store sales increased 5%. Outgoing CEO Christine Day said, "This so far has been a year of challenges," but said she believed the company was positioning itself for long-term growth.
Now what: The company reduced its full-year outlook to $0.78-$0.80, below estimates of $0.84, and the apparel maker sees $535 million-$540 million in revenue, well below estimates of $571.8 million. Surprisingly, the company forecasts just flat comparable growth sales. For a company that two years ago was posting comps above 20%, the decline to flat growth is surprising. Apparel companies in general have forecasted week fourth quarters, but there are several reasons to believe that Lululemon could bounce back in 2014 as it gets ready to expand into Europe and laps the weak sales of 2013.
