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Investing.com -- Lululemon Athletica shares slumped over 17% in premarket trading Friday after the athletic apparel retailer’s profit beat for the second quarter was eclipsed by a full-year guidance cut given weakness in its U.S. business.
The company reported earnings of $3.10 per share for the quarter ended July 28, above analysts’ expectations of $2.87, while revenue of $2.53 billion came in just below the $2.54 billion consensus estimate.
For the third quarter, Lululemon forecast earnings of $2.18 to $2.23 per share and revenue of $2.47 billion to $2.50 billion, both short of Wall Street expectations of $2.90 and $2.56 billion, respectively.
Full-year earnings are now expected in the range of $12.77 to $12.97 per share, cut from the previous range of $14.58 to $14.78, and compared with analysts’ average estimate of $14.61.
Revenue is projected between $10.85 billion and $11 billion, down from the prior forecast, $11.15 billion to $11.30 billion, and below the $11.2 billion consensus estimate.
Chief Executive Calvin McDonald said international sales momentum remained strong in the quarter but noted underperformance in the U.S. market and in product execution.
“We are disappointed with our U.S. business results and aspects of our product execution,” CEO McDonald said.
“We have closely assessed the drivers of our underperformance and are continuing to take the necessary actions to strengthen our merchandise mix and accelerate our business,” he said in the company’s release.
Raymond James analysts reiterated their Market Perform rating on Lululemon shares, noting that the company "remains a “show me” story that needs to drive better and more durable domestic growth, which is critical to estimates and the narrative."
Barclays analysts also said they are staying "on the sidelines," citing “the outsized number of issues impacting LULU” while balancing that cautious stance against “still-strong international growth and resilient market share gains in performance apparel.”
(Pratyush Thakur contributed to this report.)