Lululemon Shares Fall After Drop In Q1 Sales

Lululemon Athletica was set for its biggest one-day percentage loss in more than eight years after the company warned investors that first-quarter sales would fall, according to Reuters.

The Canadian yogawear apparel maker’s shares fell more than 23 percent to $51, its lowest level since December 2015. Its shares were the biggest percentage loser on the Nasdaq on Thursday, putting them into negative territory for the year.

Lululemon’s holiday sales were stronger than many other retailers, so analysts and investors were surprised by the “sudden collapse” in its post-holiday sales. The company’s executives said its available apparel for the current quarter had failed to entice shoppers, resulting in weaker sales both online and in stores.

The company is also under intense competition from retailers such as Under Armour, Nike and other more affordable athletic brands.

“Their fourth-quarter results uncovered several issues that are likely to create an overhang on the stock for the foreseeable future,” said Wells Fargo analyst Ike Boruchow, who downgraded the stock to “market perform” from “outperform.”

But some analysts said the company has some exciting new initiatives in the works, including a loyalty program, improved online and mobile capabilities, and its first global marketing campaign.

“While disappointing, we're comforted that the miss was partly self-inflicted,” RBC Capital Markets analyst Brian Tunick wrote in a note. “Quality of sales continues, inventory is controlled ... and efforts are underway to address product/traffic issues.”



The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

Click to comment