Lululemon Athletica Inc.
) tumbled by a significant 16.6% during yesterday's trade after
the company slashed its fourth-quarter fiscal 2013 guidance,
citing a tremendous fall in customer traffic and sales trends
since the start of January.
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The news arrived right before the company's scheduled analysts
and investors presentation at the ICR XChange Conference in
Orlando, Fla. this week.
Lululemon now projects fourth-quarter revenues in the range of
$513 - $518 million compared to the previous forecast of $535 -
$540 million. Revenue forecast is based on constant-dollar
comparable store sales (comps) decline in the low-to-mid
single-digits range, against the prior projection of flat comps.
As a result, the company has lowered its earnings per share
guidance to range between 71 cents and 73 cents, while it earlier
anticipated earnings of 78-80 cents per share.
However, the company retained its forecast for shares outstanding
at 146.0 million and tax rate guidance of 30.0%.
Looking at its performance in the first two months of the
quarter, the company remained confident of achieving its
previously stated sales and earnings target. However, the
deteriorating sales and traffic trends in January and the
expected continuation of this trend through the rest of the month
forced the company to revise its guidance.
Nevertheless, the company is encouraged to see that the
investments to strengthen and enhance its back-end product
operations structure are starting to pay off. While the company
believes that the full realization of these benefits is still a
long way, it continues to stringently focus on the successful
execution of its long-term strategic plans.
Other Stocks to Consider
Lululemon currently holds a Zacks Rank #3 (Hold). Better-ranked
stocks among apparel/shoe retailers are
Finish Line Inc.
The Men's Wearhouse Inc.
Shoe Carnival Inc.
). All these stocks have a Zacks Rank #2 (Buy).