Investors Blame Lululemon Management for Poor Sales:

NEW YORK (TheStreet) -- Lululemon  (LULU) management agrees on one thing: the company shares will rise from current levels. But its bickering board doesn't have a coherent plan on how that will happen, say investors. And that's making folks on uncomfortable with holding the stock.

The athletic-wear company announced Thursday that it would repurchase up to $450 million of its common shares in the next two years. The bullish action, however, couldn't counter reduced guidance.

Management lowered full-year expectations. It now expects net revenue in the range of $1.77 billion and $1.8 billion. Earnings-per-share, not including a one-time tax adjustment, should come in between $1.71 and $1.76. Analysts had expected EPS of $1.89 on $1.8 billion in revenues, according to stats on Yahoo! Finance.

The stock fell nearly 16% by 1 p.m. ET. Sentiment dropped 20%, according to StockTwits' analytics. About 41% of StockTwits' users believe shares will continue to decline.

$LULU trimmed out 38.08, bailed on the rest 37.60s, $SPY is no help and 5 min turned down, 37.35 is final support on 60 min 5pd ma

? jea yu (@JeaYu21) Jun. 12 at 12:47 PM

Any pundit using "Downward Dog" when talking $LULU should be forced to be in the pose as they say it

? Greg Harmon (@harmongreg) Jun. 12 at 12:34 PM

Analysts at Stifel Nicolaus and William Blair downgraded the stock Wednesday from a buy to hold and market perform, respectively. Other analysts took down their price targets.

Jefferies cuts price target on Lululemon to $41 (US) from $50, keeps hold rating $LULU

? Darcy Keith (@eyeonequities) Jun. 12 at 01:12 PM

The lowered guidance comes amid management turmoil and turnover. The company announced today that Chief Financial Officer John Currie plans to retire at the end of the fiscal year.

Yesterday, founder Dennis "Chip" Wilson explained that he voted against the company's new chairman, Michael Casey, and another director because he believes the board favors short-term results at the expense of long-term goals that will ultimately increase shareholder value. Shares are down 54% from an all-time high hit about a year-ago.

Lululemon issued a June 11 statement in response arguing that the Board has always been focused on enhancing shareholder value: "By leveraging its design-led roots, strengthening its supply chain and providing an exceptional guest experience, we are confident that Lululemon, under new CEO Laurent Potdevin's leadership, will provide guests with the high-quality, technical products they know and love and create value for shareholders."

takeaway from Lululemon Q1conf call on boardroom spat: "Our parents are fighting & it's awkward": CEO Laurent Potdevin $LULU

? marina strauss (@MarinaStrauss) Jun. 12 at 11:54 AM

Shareholders aren't so sure. Some blamed the Board for blowing a leadership position with a barrage of bad choices, including how they handled a see-through pants recall. Initially, founder Wilson implied that some women's bodies weren't made for svelte yoga pants. These women's thighs, etc., were stressing the material, causing it to become transparent. He later apologized.

$LULU kind of mind blowing how management screwed up that 1 letting competition catch up & eat their lunch after building really great brand

? Jean Fonteneau (@JFinDallas) Jun. 12 at 11:40 AM

$LULU - I used to love and have the faith in the company. But over the last year, management clearly showed their incompetence. Sigh!

? MWK (@Kikiko) May. 6 at 11:24 PM

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.


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