The trendy yoga-wear retailer, Lululemon Athletica (NASDAQ: LULU) has cut its full year earnings forecast. The stock has tumbled since the release of the news, even as their first quarter earnings beat analyst estimates.
The Vancouver based firm reduced its expected revenue for the year to be in the range of $1.77 billion to $1.80 billion, with adjusted full year earnings of $1.71 to $1.76 per shares. It had earlier forecast earnings of $1.80 to $1.90 per share with expected revenue of $1.77 billion to $1.82 billion.
Expected second quarter sales were also reduced to $375 million to $380 million, down from the $387 million forecasted by analysts. With this announcement, shares of Lululemon were down as much as 16% in pre-market trading.
Net revenue for their first quarter rose 11% to $385 million, surpassing analyst estimates of $381 million. Its profits in the first quarter were 34 cents per share beating analysts expecting earnings of 32 cents per share.
Despite the reduced earnings, executives at Lululemon remain optimistic. . “We are pleased that Q1 results were slightly ahead of our expectations,” CEO Laurent Potdevin said in a statement. “2014 is very much a transitional year for Lululemon, and we are on track with the improvements we have set out to achieve. We are focused on building a scalable foundation to further elevate our North American business and pursue the brand’s incredible international potential,” he said. “Despite a reduced outlook, I am confident that the work we are doing today will only enhance our premium positioning as we continue to lead as the market innovator.”
The firm also announced their Chief Financial Officer, John Currie would retire by the end of the fiscal year. He has been with the company for seven years. Chief Executive Officer Christine Day was replaced by Laurent Potdevin in January.
Lululemon is still recovering from their embarrassing recall from last year. Their popular yoga pants was recalled when it found out the material used to make them were too revealing. The company is trying to market their clothes to men, but face stiff competition from traditional athletic clothing makers like Nike (NYSE: NKE), Under Armour (NYSE: UA), Reebok and Adidas.
As of 10:30 this morning, shares of Lululemon were down around 15% trading at $37.60.