Lululemon Athletica Inc. (LULU) Stock Plunges After Cutting Earnings Guidance

The stock price of Lululemon Athletica Inc. (NASDAQ:LULU) declined as much as 6.5 percent to $64.57 per share in early trading after the yoga apparel retailer reduced its earnings guidance and expressed concerns regarding its prospects during the holiday season because of supply chain problems.

Lululemon Athletica Inc. (LULU) Stock Plunges After Cutting Earnings Guidance

According to the company, the arrival of its products for the fall season was late by 3.5 weeks. John E. Currie, chief financial officer of Lululemon Athletica Inc. (NASDAQ:LULU) explained that the company raised its sewing standards after the company suffered an embarrassing recall of its yoga pants earlier this year. He said that the company is suffering a “short-term pain” amid efforts to improve the quality of their products.

Currie said, “We anticipate that the knock-on effect will continue to affect the timing of product deliveries into the third quarter and through the rest of the year.”

Lululemon cut its earnings guidance for the full year 2013

Lululemon Athletica inc. (NASDAQ:LULU) cut its earnings guidance for the full year 2013 in the range of $1.94 to $1.97 per share. The yoga-apparel retailer expects to deliver revenue in the range of $1.625 billion to $1.635 billion.

Previously, the company anticipated that it would be able to generate full-year earnings per share in the range of $1.96 to $2.01 and revenue in the range of $1.645 billion to $1.665 billion.

Commenting on the outlook provided by the management of Lululemon Athletica inc. (NASDAQ:LULU), Brian Sozzi, CEO of Belgus Capital Advisors, said the company is generally conservative with its expectations, and its cautious view towards the holiday season is similar to other retailers. “The company continues to hurt its perception on the Street with their guidance. The stock has moved up so much, and this is another time they disappointed on their guidance,” said Sozzi.

Lululemon Athletica reduced its earnings outlook

Although Lululemon Athletica Inc. (NASDAQ:LULU) reduced its earnings outlook, the company delivered good second quarter financial results. The company’s revenue increased by 22 percent to $344.5 million, compared with its $282.6 million revenue in the same period a year earlier. The company reported $56.5 million net income, or $0.39 diluted earnings per share.

According to the yoga-pants retailers, its comparable store sales climbed by 8 percent and gross profit increased by 19 percent to $186 million during the period.

Christine Day, chief executive officer of Lululemon Athletica Inc. (NASDAQ:LULU) said customers are responding to the design of its fall products. According to her, the company’s Full-On Luon product is successful.

Lululemon announced its partnership with Noble Biomaterials

“We have not only worked our way back from the black luon setback, but have also added very talented people in important functions and have taken major steps forward on a number of key fronts including the expansion of our international and men’s businesses and many logistical initiatives,” said Day in a statement.

Lululemon Athletica inc. (NASDAQ:LULU) also announced its partnership with Noble Biomaterials. The yoga-pants retailer obtained exclusive rights to use Nobles’ static antimicrobial technology in its performance apparel.