Lululemon Athletica Inc. fell the most in almost 20 months after forecasting third-quarter profit that missed analysts’ estimates, raising concerns that the yogawear maker is relying too heavily on the holiday season to meet full-year projections.
Profit in the quarter through October will be as much as 37 cents a share, the Vancouver-based company said in a statement Thursday. Analysts estimated 42 cents a share. Even with the weaker-than-projected outlook for the current period, Lululemon raised its forecast for full-year earnings by a penny, to as much as $1.92 a share.
“In order to get there, you’re shifting earnings from the third quarter to the fourth quarter,” said Dorothy Lakner, a New York-based analyst at Topeka Capital Markets.
Lululemon shares slipped 16 percent to $53.54 in New York, the biggest one-day drop since January 2014. The shares are now down 4 percent this year.
Chief Executive Officer Laurent Potdevin is working to boost Lululemon’s stock of seasonal products that have stylish elements -- like open-backed tops and floral-patterned leggings -- to appeal to customers wearing the clothing outside of yoga studios. The retailer also expanding its international presence and trying to increase its foothold among male customers by adding more floor space for men’s products.
Lululemon’s second-quarter results indicated the strategy may be working. Profit was 34 cents a share in the quarter ended Aug. 2, topping analysts’ 33-cent average estimate. Revenue rose 16 percent to $453 million, also beating projections.
“As long as there’s sales momentum, they’ll probably do a bit better than the guidance,” Lakner said.