≡ Menu

Greatness Risk: Lululemon Profit Slump, Lower Prices? Eh, That’s Mediocre

in Business of Yoga, YD News

lululemon_profitsdown_pricesupAll right, we admit at this point we almost feel bad giving the lulus a little jib jab. Really, it’s not even our nature to roast tootsies when they’re already cookin’. It’s like when everyone’s in awe of the macho popular kid with his buff muscles and uber coolness until everyone finds out he’s really just pumping steroids and walking on stilts made of marshmallows. Now everyone’s aghast and worried he can’t lead the team to the championships! Oh right, like you haven’t heard that one before. Mmk, it’s not an exact analogy, but it sure does have a lot to do with image and hype, bells and whistles, smoke and mirrors… you get the picture?

It’s true, some get a little grumpy pants when we yap about lulu and their gaggle of lollies. Well now you can turn that rotten stink eye to the analysts and detractors who are still spinning from the mediocre Q1 results from a couple Thursdays ago. Facts people!

Earnings fell to $6.5 million, or 9 cents a share, in the company’s first quarter, ended May 3, from $8.5 million, or 12 cents a share, a year earlier.

The company’s shares, which have dropped by half in the past year, were down 11 percent at C$14.95 on the Toronto Stock Exchange on Thursday morning (within hours of the announcement)

Lululemon forecast second-quarter revenue of $85 million to $90 million, with earnings per share of 8 cents to 9 cents. (the same as last year and below analysts’ average estimate).

Lululemon sank $1.88, or 12 percent, to $13.34 at 4 p.m. New York time in Nasdaq Stock Market composite trading, the steepest drop since April 20.

And so the market is tugging on the luoned ones to lower prices in the face of pitfall profits. But greatness will not give in! They are so insistent on making sure everyone knows they will definitely NOT be dropping prices geez! that they’ve even made the announcement to eat the cost of higher quality zippers rather than raise retail price for you, dearest customers, still paying wads of benjamins for yoga clothes (or plenty of plastic). New factories will churn out butt-enhancing even faster but the lulus will not pass that cost on to the consumer (guest?)! We can all rejoice! Oh sure, sneaky discounts here and there, but seriously (they are NOT Old Navy); lowering prices is so below them, and so sub-par on the greatness scale.

In fact, all of you outlet hopefuls pining for the next tipsy wine-enhanced warehouse shopping spree, you will be sorely disappointed:

Ms. Day also said the retailer has sold enough merchandise at full price or discounted at outlet stores that it will not hold a chainwide sale in July to clear out summer merchandise at a discount. [FP]

Drat! Sadness. We should’ve warned you to grab the kleenex.

So Yoga is/was/still is a growing ‘industry.’ Are we reaching a tipping point, a bubble bound to burst? Day expects profits and growth to rebound in 2010. Wouldn’t we love to know where yoga, and Canada’s #95 richest man 2008-09, will be then…

Lululemon’s dilemma: Higher quality, better prices, lower profit [Globe and Mail]


[Financial Post]

0 comments… add one

Leave a Comment