Lululemon Athletica  (LULU - Get Report)  reports fiscal 2016 first-quarter earnings June 8. We already know the yoga apparel company has a weak outlook for the quarter but the problems are greater than that.

At the end of March LULU reported a better-than-expected fiscal fourth quarter but the company gave a weak first-quarter outlook. LULU reported earnings of 85 cents, 5 cents ahead of the consensus estimate. Revenue rose 16.9% to $704.3 million versus the $693.8 million. The quarter was driven by better than expected same-store sales of 11%.

Think about it: Despite a strong fourth quarter, management guided to a weak first quarter. The company said the first quarter would come in between 28 cents and 30 cents a share versus the consensus estimate of 38 cents. Revenue guidance was basically in line and the company sees revenue between $483 million and $488 million. Management blamed the strong dollar for the earnings shortfall.

But here's my problem. Fourth-quarter operating margins fell 250 basis points to 23.6% and gross margins are expected to decline another 130 basis points in the first quarter. While the company blamed ongoing investments in the supply chain and higher spending on stores and distribution, I think the gross margin pressure is coming from e-commerce. At least half a dozen retailers have cited ongoing margin pressure from fast growing e-commerce sales.

The e-commerce business is a lower-margin business, so when it grows faster than the store network, margins suffer. Fourth-quarter comps rose 11%, but one-third of that was e-commerce. The stores reported a 5% same-store figure. On the conference call afterwards, management guided to a mid-single-digit comp for the first quarter, which implies a sequential slowdown.

The other major issue I have with LULU is inventory. Inventory is growing faster then revenue. LULU ended the year with a staggering $284 million in inventory, up 36% on a 14.56% increase in revenue. Management said it expects to get inventory in line by the end of the first quarter. I'll believe it when I see it. For the company to get inventory down to an acceptable level, management has to take aggressive markdowns, which will keep the pressure on gross margins.

We've seen this movie before. When a retailer keeps year-end guidance steady and guides down one quarter because of inventory issues, it implies management is planning to make up the shortfall in the back half of the year. The company has to add over 200 basis points to gross margins between the first quarter and the fourth. Right now, the Street thinks first quarter revenue will grow around 14%, but historically, the company usually does 10% in the first quarter.

If I'm right, that means, LULU will most likely miss the first quarter because revenue won't grow as fast as expected, the retailer will wreck margins trying to get rid of excess inventory and will realize it can't make the back half of the year without a miracle.

LULU investors could be doing the downward dog pretty soon.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.