Vancouver-based leisurewear giant Lululemon Athletica Inc. (Nasdaq:LULU) released earnings after markets closed today that matched analysts' expectations, but the company's share price dropped as much as nine per cent in after-hours trading because of weak guidance.
Lululemon earned US$255.47 million, or US$2-per-share, in the quarter that ended Oct. 30, which was in line with analysts' estimates. Its revenue jumped 28 per cent year-over-year, to US$1.86 billion, which was above analysts' expected US$1.81 billion.
Investors' concerns were likely that the company now expects sales and profit in the current holiday-season quarter to be at the lower end of what it had previously forecast.
Lululemon said it expects revenue to be between US$2.605 billion and US$2.655 billion this quarter, while analysts had on average expected the company to generate US$2.655 billion. The company's earnings estimate for this quarter is now between US$4.20 per share and US$4.30 per share, which guides largely lower than the US$4.28 per share that analysts had expected.
Inventory levels are rising, perhaps indicating that products are not selling as much as expected, even though CEO Calvin McDonald in a release discussed his company's "momentum," and said that "we are pleased with our early holiday-season performance."
Lululemon inventory levels increased 85 per cent to US$1.7 billion worth of product in the company's third quarter, which ended Oct. 30, compared with the same quarter one year ago.
McDonald said on the company's conference call that Lululemon had its biggest sales day ever on Black Friday (Nov. 25).
Lululemon's shares closed the trading day at US$374.51, up 0.59 per cent. Its 52-week high was US$427.47, while its 52-week low was US$251.51,
