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Last Update: 19-Mar-13 07:43 ET
Lululemon shares plunge 7% following weaker than expected outlook
lululemon athletica (LULU $61.00 -4.90) "notified guests that we expect a shortage in our supply of black Luon pants and crops. We have determined that certain shipments of product received from our factories and available in store from March 1, 2013 do not meet our technical specifications. The items affected are certain styles of women's bottoms in our signature black Luon fabric. The ingredients, weight and longevity qualities of the pants remain the same but the coverage does not, resulting in a level of sheerness in some of our women's black Luon bottoms that falls short of our very high standards. Over the past weekend we pulled all of the affected black Luon women's bottoms from our stores, showrooms and e-commerce site and are working with our supplier to replace the fabric and our other manufacturers to replace these key items as quickly as possible. We believe the affected items represented approximately 17% of all women's bottoms in our stores and for the near term there will be a shortage of these styles available to our guests." "We expect this issue will have a significant impact on our financial results. Up to March 17, 2013, we were tracking to a comparable-store sales percentage increase of 11% on a constant dollar basis and expected revenue guidance to be in a range of $350 million to $355 million for the first quarter of 2013. We now expect a comparable-store sales percentage increase in the range of 5% to 8% for the first quarter of 2013, resulting in an expected revenue range of $333 million to $343 million (vs $354.01 Capital IQ Consensus Estimate). We are working to determine the impact on our earnings in the first quarter as well as expected impact for the balance of 2013. We will provide further information during our regularly scheduled earnings call Thursday March 21st."
