Struggling retailer Lululemon Athletica Inc. forecast a second-straight year of profit declines, further pressuring a brand that’s dealing with product mishaps while searching for a new chief executive officer.
The midpoint of the athleisure company’s sales forecast also missed the average of estimates compiled by Bloomberg. Tuesday’s earnings report did little to assuage investor concerns that Lululemon can recapture the growth it was once known for, says Bloomberg’s Poonam Goyal. The company didn’t announce a new CEO, as some had expected, even though it did name a long-time apparel executive to its board.
Struggling retailer Lululemon Athletica Inc. forecast a second-straight year of profit declines, further pressuring a brand that’s dealing with product mishaps while searching for a new chief executive officer.
The performance gives founder Chip Wilson added fuel as he calls for strategic changes and an overhaul of the company’s board. Lululemon has also recently found itself back in an uncomfortably familiar position: facing backlash for poor-quality clothing that is too sheer for comfort. And sales have been hit by increasing competition from newer brands like Alo Yoga and Vuori.
Lululemon reported net revenue in the Americas fell 4% in the fourth quarter. While Goyal said the international business remains strong, “that isn’t enough to counter US weakness.”
The company is focused on improving full-priced sales in the Americas after seeing more demand for markdown items last year, executives said on Tuesday. Lululemon is also increasing new product launches and enhancing the in-store experience.
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