Lululemon Craters 20% After Slashing Guidance

Lululemon's shares plummeted after the company cut its profit outlook for the full year and projected lower-than-expected sales for the current quarter. The company now expects sales of $2.54 billion to $2.56 billion for its fiscal second quarter, lower than the average analyst estimate. For the full year, Lululemon reduced its earnings per share outlook by about 2.5%. Despite reporting decent Q1 results, comparable-store sales were disappointing, growing only 1% and short of the estimate of 2.8%. The Americas business posted negative comparable-store sales in the period. The company's latest forecast was particularly concerning, with Q2 net revenue expected to be $2.54 billion to $2.56 billion, missing estimates of $2.57 billion. The full-year forecast was also slashed, with earnings per share expected to be $14.58 to $14.78, missing estimates of $14.91. The market was not expecting this from the former growth darling, and Lululemon shares fell over 20% in after-hours trading. The stock has declined nearly 14% so far this year through Thursday's close. Lululemon is struggling to cope with cautious shoppers, higher inflation, and growing competition, and its efforts to lift demand by entering new product categories and expanding its offerings have so far failed.