Lululemon Athletica released its third quarter earnings report before opening bell this morning, just edging out earnings estimates but missing on sales. The apparel retailer reported earnings of 38 cents per share, excluding items, and $479.7 million in revenue, a 14% year over year increase, compared to the analyst estimates of 37 cents per share and $481.78 million. Excluding some tax adjustments, earnings were 35 cents per share for the quarter. In last year’s third quarter, the company recorded sales of $419.4 million and earnings of 42 cents per share.
Shares of Lululemon Athletica tumbled in premarket trading this morning, falling by as much as 11.62% to $46.10 per share and continuing the drag on the Retail Sector.
Lululemon Athletica’s comparable sales rise
Lululemon’s comparable sales, including both store sales and direct to consumer sales, climbed 9% year over year in constant dollars. Comparable store sales climbed 6% in constant dollars, while direct to consumer sales climbed 21%.
Net revenue from the direct to consumer channel climbed 16% to $89.3 million and made up 18.6% of total revenue, a slight increase from last year’s 18.4% of total revenue.
Lululemon cuts full year outlook
Lululemon Athletica said for the fourth quarter, net revenue is expected to be between $670 million and $685 million based on comparable sales rising by the mid-single digits in constant dollars. Earnings are expected to be between 75 cents and 78 cents per share, which comes up significantly short of the consensus at 85 cents per share. The sales guide was weak also, as analysts were projecting fourth quarter sales of $690 million.
For the full year, the retailer expects net revenue to fall between $2.025 billion and $2.04 billion with comparable sales rising in the high single digits in constant dollars. The previous guidance was for full year sales of between $2.03 billion to $2.06 billion. Earnings are expected to be between $1.81 and $1.84, compared to the previous guide of between $1.87 and $1.92 per share. Excluding the tax adjustments that were made during the third fiscal quarter, earnings for the full year are expected to be between $1.78 and $1.81 per share.