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Lululemon Athletica Inc.
warned that it expects profit margins to fall for its fourth quarter, even as the athletic-apparel maker reports continued strong shopper traffic.
Shares fell more than 12% in premarket trading Monday to $288.50. Through Friday’s close, shares were off 7.3% over the previous 12 months.
Lululemon now expects its gross margin to fall between 0.9 and 1.1 percentage points for the quarter, after previously saying that it expected a slight increase.
The company on Monday also tightened its earnings forecast for the fourth quarter and bumped up its revenue target.
Lululemon is projecting earnings of between $4.22 and $4.27 a share, compared with previous guidance of $4.20 and $4.30 a share. Lululemon, which last April unveiled a five-year growth plan to double revenue by 2026, recorded per-share earnings of $3.36 in the year-earlier fourth quarter.
Revenue for the three months is now seen in a range of $2.66 billion to $2.7 billion, up between 25% and 27% on a year earlier and ahead of the previous target range of $2.61 billion to $2.66 billion.
Chief Executive
Calvin McDonald
said traffic for the company remains strong in the fourth quarter across physical and digital channels.
Write to Robb M. Stewart at robb.stewart@wsj.com
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