Lululemon shares plummet after disappointing sales forecast – Ontario News

Lululemon shares plummet after disappointing sales forecast – Ontario News

Shares of Lululemon Athletica Inc. were set for their biggest one-day percentage loss in more than eight years on Thursday, after the Canadian yogawear apparel maker warned that first-quarter sales would fall.

Lululemon shares tumbled more than 23 per cent to $51, their lowest level since December 2015, after brokerages slashed their price targets and ratings.

The company’s holiday sales were stronger than for many other retailers, and investors had been optimistic heading into Wednesday’s after-hours release of Lululemon’s fourth-quarter results, with shares closing 4 per cent higher.

But analysts and investors were surprised by the “sudden collapse” in Lululemon’s post-holiday sales, as executives said they expected the company’s first same-store sales decline in 28 quarters, or since 2009.

Lululemon executives said on Wednesday its apparel on offer for the current quarter had so far failed to excite shoppers who sought the depth and colour demanded by spring fashion, resulting in weaker sales, both online and at stores.

The Vancouver-based retailer, which popularized “athleisure,” faces relentless competition from Under Armour , Nike and a multitude of other companies selling cheaper gym-wear.

“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.”

“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…

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