Lululemon has lowered its full-year outlook, which interim co-chief executive Meghan Frank blamed on “negative commentary in the media” and product launches that failed to entice shoppers.
“We experienced spikes of negative commentary in the media and on social channels about our brand, which had an impact on traffic and overall top-line performance,” Frank told analysts during the company’s earnings call.
Sales for the athleisure brand rose 4% to $2.5bn in its first quarter, with a 22% surge in international revenues helping to offset a 3% dip in its largest Americas business.
The positive performance in its international arm was aided by the continued store openings across EMEA, including the recent launches of its Birmingham branch and two locations in Greece.
Meanwhile, its American business has suffered a slowdown in momentum across its stores and online channels.
“Not all of our product launches have met our expectations,” Frank told analysts. “While we’ve had several successful launches so far this year, we’ve seen others as we start Q2 not generate the anticipated guest response.”
Lululemon posted a 3% fall in gross profit to $1.3bn, while income from operations plunged 37% to $276.9m in the quarter.
As a result, the brand has adjusted its full-year outlook and expects net revenue to be in the range of $11bn to $11.2bn. This represents a decline of 1% to 0%.
Lululemon is forecasting second-quarter sales to be in the range of $2.45bn to $2.47bn, representing a decline of 3% to 2%.
Frank said: “Our work to drive improvements in North America resulted in some positive signals in the quarter, including a sequential improvement in full-price sales. More recently, we have been navigating headwinds that have led us to adjust our outlook for the full year.
“We have assessed the business and are taking additional actions to reposition where needed and further strengthen our product engine. We remain confident in our path forward.”
Lululemon has also spent the last six months in a proxy contest with its founder, Chip Wilson, which has been costly and taken attention away from its turnaround.
The brand reached a settlement with Wilson earlier this week, which saw the founder agree not to publicly criticize the company for roughly 18 months in exchange for Lululemon to appoint his chosen candidates to the board.
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