June 12 (Bloomberg) -- Lululemon Athletica Inc., the yogawear retailer that named a new CEO in December, cut its full-year earnings forecast as it looks to expand into international markets and recovers from a product recall.
Lululemon fell as much as 11 percent in early trading after it said adjusted earnings will be $1.71 to $1.76 a share, down from an earlier forecast of as much as $1.90. Analysts projected $1.89, the average of estimates compiled by Bloomberg. Revenue for the year will be as much as $1.8 billion, less than a previous projection of a maximum of $1.82 billion, the Vancouver-based company said in a statement today.
Chief Executive Officer Laurent Potdevin, who replaced Christine Day in January, is working to speed up Lululemon’s expansion into new markets abroad while maintaining quality. The company also is trying to appeal to men as more retailers sell athletic wear to capitalize on a trend of wearing workout clothes in casual settings. It’s also seeking to increase sales at higher prices and entice shoppers into mall stores.
Lululemon plunged to $39.45 at 7:53 a.m. New York time. The shares had declined 25 percent this year through yesterday.
Chief Financial Officer John Currie will retire at the end of the fiscal year, the retailer also said today.
“We are focused on building a scalable foundation to further elevate our North American business and pursue the brand’s incredible international potential,” Potdevin said said today in a statement. “Despite a reduced outlook, I am confident that the work we are doing today will only enhance our premium positioning.
The outlook calls for second-quarter sales of $375 million to $380 million, short of the $387 million estimated by analysts.
First-quarter profit excluding some costs was 34 cents a share, the company said, exceeding analysts’ estimates for 32 cents. The figure excludes a one-time adjustment of $30.9 million for the repatriation of foreign earnings to fund a share buyback of as much as $450 million, Lululemon said.
In the first quarter ended May 4, comparable corporate- store sales fell 4 percent at constant exchange rates, while ‘‘direct to customer’’ revenue rose 25 percent. Revenue rose 11 percent to $385 million, beating analysts’ estimates of $381 million.
Potdevin is seeking to address supply-chain issues and quality checks that have slowed deliveries. Lululemon also is trying to regain shoppers’ trust after the retailer was forced to recall its most popular line of yoga pants for being too sheer when customers bent over.
The company’s founder, Chip Wilson, apologized in November for comments he made suggesting its products don’t work for some women’s bodies. Wilson said in December that he would step down as chairman before an annual meeting this month.
Wilson said in a statement yesterday that he voted against the re-election of Michael Casey, who succeeded him as the retailer’s chairman, saying the board has been too concerned with short-term results. The founder also voted against re- electing director RoAnn Costin, a financial investing executive who has served on the board since 2007. Wilson owns 27 percent of Lululemon’s shares outstanding.
The share buyback will be completed over two years, Lululemon said.
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