The athletic gear maker has been struggling with its brand's image since a last year's recall of its black yoga pants due to transparency issues and founder Chip Wilson's critique that some female bodies weren't ideal for its yoga pants caused once-loyal customers to shun the products.
While fourth-quarter results beat estimates, guidance for its first quarter was lower than analyst averages compiled by Thomson Reuters. Management said it expects revenue between $377 million and $382 million, based on flat comparable sales, and net income in the range of 31 cents to 33 cents a share.
Analysts had expected $389.39 million in sales and net income of 38 cents a share for the three months to April.
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"As we move into 2014, we are reflecting on our learnings with humility, and are entirely focused on our future," said Laurent Potdevin, CEO since the beginning of the year. "2014 is an investment year with an emphasis on strengthening our foundation, reigniting our product engine, and accelerating sustainable and controlled global expansion."
For its fourth quarter ended Feb. 2, the specialty apparel retailer reported net revenue 7% higher to $521 million, while comparable store sales over the quarter decreased 2%. However, gross profit margins dropped 300 basis points to 53.5%, its third consecutive quarterly decline.
Net income of $109.7 million, or 75 cents a share, was largely on par with profits of $109.4 million, or 75 cents a share, a year earlier.
Analysts forecast net income of 72 cents a share and sales of $515.11 million.
Before the bell, shares had taken off 1.9% to $47.34. Year to date, the stock is down 18.3%.
TheStreet Ratings team rates LULULEMON ATHLETICA INC as a Hold with a ratings score of C+. The team has this to say about their recommendation:
"We rate LULULEMON ATHLETICA INC (LULU) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and weak operating cash flow."
- You can view the full analysis from the report here: LULU Ratings Report