Lululemon Athletica Inc. cut its sales guidance for the fiscal year as the yoga gear maker offered a cautious outlook for the current quarter, which includes the critical holiday shopping season.
Shares slid 9.6% premarket to $61.80, despite Lululemon’s reporting stronger-than-expected results for its fiscal third quarter. As of Wednesday’s close, the stock was down 10% so far this year.
The company now expects revenue for the year of $1.605 billion to $1.61 billion, down from its earlier view of $1.63 billion to $1.64 billion. It lowered the top end of its earning outlook by a penny to a range of $1.94 to $1.96 a share.
Lululemon projected earnings of 78 cents to 80 cents a share for the current quarter on revenue of $535 million to $540 million. Same-store sales are expected to be flat on a constant-dollar basis. Analysts polled by Thomson Reuters were looking for 84 cents and $572 million, respectively.
A number of retailers have offered tepid views after a somewhat disappointing start to the holiday season.
Meanwhile, the company’s once strong reputation has been tarnished by a series of mishaps and public relations stumbles, including a recall of yoga pants last spring that the company has said snarled supplies and will cost Lululemon tens of millions of dollars. Despite recent efforts to improve its quality control, customers have continued to complain about pilling and sheerness with the newly produced pants.
Amid these woes, founder Dennis “Chip” Wilson recently decided to step down as chairman, clearing the way for the company’s new chief executive, Laurent Potdevin, to manage the company through its recent troubles.
For the quarter ended Nov. 3, the Vancouver-based company reported a profit of $66.1 million, or 45 cents a share, up from $57.3 million, or 39 cents a share, a year ago. Revenue grew 20% to $379.9 million.
The company had predicted earnings of 39 cents to 41 cents a share on revenue of $370 million to $375 million.
Same-store sales were up 5% on a constant-dollar basis, though gross margin slipped to 53.9% from 55.4% as product costs jumped 24%.
This article originally appeared on MarketWatch.com.