Lululemon Athletica Inc., the yogawear retailer that named a new chief executive officer this week, fell the most in six months after forecasting quarterly profit that trailed analysts’ estimates amid product delays.
Profit in the fourth quarter will be 78 cents to 80 cents a share, the Vancouver-based company said today in a statement. Analysts projected 84 cents, the average of 30 estimates compiled by Bloomberg.
Lululemon, which had to recall pants this year for being too sheer, said a slowdown in sales seen in the third quarter has continued this period as increased quality checks delay delivery of new apparel. The lag is affecting popular seasonal items, Chief Financial Officer John Currie said.
“The improvements that are underway on the supply chain side are a journey. It’s not all at once,” he said today on a conference call with analysts.
The shares tumbled 12 percent to $60.39 at the close in New York, the biggest decline since June 11. Lululemon has fallen 21 percent this year, while the Standard & Poor’s 500 Index has added 24 percent.
Sales in the fourth quarter will be $535 million to $540 million, the company said today. Analysts projected $572.5 million, on average. Lululemon also projected same-store sales in the period to be little changed while analysts anticipated an increase of 7.9 percent.
“This is much worse than anyone was expecting,” Corinna Freedman, an analyst at Wedbush Securities in New York, said in a phone interview. “Everything else in the mall is marked down, maybe the customer is distracted by the fact that she can get jeans for 50 percent off.”
Freedman has the equivalent of a hold rating on the shares.
Laurent Potdevin, 46, will replace Christine Day as CEO in January, Lululemon said Dec. 10. Potdevin, most recently president of TOMS Shoes Inc., joins as the retailer struggles to improve operational missteps, and faces the challenge of expanding the chain internationally even as competition increases in North America.
“While our outlook for the fourth quarter is being impacted by both macro and execution issues, I believe that the investments we are making in the business combined with the team in place create a strong platform for growth in the years ahead,” Day said in today’s statement.
Profit in the third quarter was 45 cents a share, exceeding analysts’ average estimates of 41 cents a share. Same-store sales increased 5 percent in the quarter, trailing the estimated 5.3 percent increase forecast.
Day, who took over as CEO in 2008, has been moving beyond yoga as competitors including Gap Inc. and Macy’s Inc. boost their assortments of products in Lululemon’s core market.
Day, 51, announced plans to retire in June, about three months after the company said it would recall some shipments of its black Luon pants because they were too sheer and didn’t meet its standards. Just weeks after the recall, Lululemon said Chief Product Officer Sheree Waterson was stepping down. Lululemon named Tara Poseley, who had worked at Kmart and Bebe Stores Inc., as product chief in October.
Lululemon founder Chip Wilson will step down as chairman before the company’s annual meeting in June, the company said this week.