NEW YORK (TheStreet) -- Lululemon Athletica (LULU - Get Report) shares were plunging more than 10% on Thursday after the yoga and athletic apparel maker delivered better-than-expected third-quarter earnings but said comparable sales in the final quarter of the year will be flat.
The Vancouver-based company reported net income of $66.1 million, or 45 cents a share, compared to $57.3 million, or 39 cents a share, in the third quarter of last year. Analysts, according to Thomson Reuters, had expected Lululemon to post earnings of 41 cents a share.
Third-quarter revenue rose 20% to $379.9 million from the year-earlier quarter, surpassing analysts' predictions of $376 million. Comparable-stores sales rose by 5% on a constant dollar basis, the company said.
Still, shares were dropping 10.9% to $60.91 at last check.Lululemon warned Wall Street that fourth-quarter revenue would be in the range of $535 million to $540 million based on flat comparable-store sales. The company expects earnings per share to be in the range of 78 cents to 80 cents . Wall Street forecasts earnings of 84 cents a share. For the full year, Lululemon expects revenue in the range of $1.605 billion to $1.61 billion and per-share earnings ranging from $1.94 to $1.96. "We are proud of our third quarter results, with sales in line with our expectation and earnings ahead of our guidance and rebounding to a double digit growth rate." CEO Christine Day said in the earnings statement. "This so far has been a year of challenges, learning, and growth for lululemon, and while our outlook for the fourth quarter is being impacted by both macro and execution issues, I believe that the investments we are making in the business combined with the team in place create a strong platform for growth in the years ahead." Wall Street cheered the company on Tuesday when it announced that outgoing CEO Day would be replaced by Laurent Potdevin, who has had brand and management experience at Louis Vuitton, Burton Snowboards and most recently as the president of TOMS Shoes, the socially responsible company known for matching every pair of shoes purchased with a pair of shoes given to a child in need. Day announced in June that she would be resigning after the company filled her position. The company also announced this week that Chip Wilson, its founder and chairman, would resign from the position prior to Lululemon's annual meeting next June. Michael Casey, Lululemon's lead director and a former Starbucks (SBUX) executive, will assume the chairman position. Lululemon has been barraged with bad publicity after it was forced to recall its popular luon pant over sheerness complaints this past spring. More recently, customers have been complaining about pilling on the expensive yoga pants. Wilson stirred up quite the public relations nightmare by publicly saying during a media interview that: "Quite frankly, some women's bodies just actually don't work for it." -- Written by Laurie Kulikowski in New York. Follow @LKulikowski