Lululemon lowers sales forecasts following unsuccessful product release

• Wall Street's expectations for Lululemon's sales were not met, despite the company's earnings beating expectations.
• The apparel retailer lowered its sales guidance.

Wall Street's fiscal second-quarter sales expectations were missed and guidance was lowered by the company after a failed product launch and slow growth in the Americas.

Lululemon now anticipates full year net revenue to be between $10.38 and $10.48 billion, down from a previous range of between $10.7 billion and $10.8 billion. The company also expects earnings per share to be in a range of $13.95 to $14.15, down from previous guidance of $14.27 to $14.47.

According to a survey of analysts by LSEG, formerly known as Refinitiv, the company's performance exceeded Wall Street's expectations.

• Earnings per share: $3.15 vs. $2.93 expected
• Revenue: $2.37 billion vs. $2.41 billion expected

Shares dropped as much as 10% in extended trading.

In the three-month period ending July 28, the company's net income was $393 million, or $3.15 per share, which is higher than the $342 million, or $2.68 per share, reported in the same period a year ago.

Lululemon's sales increased by 7% to $2.37 billion, but the company fell short of expectations on comparable sales growth, which was only 2%, compared to forecasts of 5.9%.

In the third quarter, Lululemon removed its Breezethrough leggings, which were launched in July, due to customer complaints about the product's unflattering fit. This misstep occurred after the company faced difficulties with its product assortment, including not offering the desired colors and sizes for its core customers.

The slowdown in the company's largest market, the Americas, can be attributed to the poor performance of the flops. Despite growing sales by just 1% during the quarter, the region remains a significant contributor to the company's overall success.

Lululemon's international sales increased by 29%, and the company is focusing on expansion in China as a means of growth.