Lululemon Athletica shares plunged on Monday, after the activewear retailer revealed that profit margins were likely to have contracted substantially over the final quarter of the year.
Lululemon is expecting fourth quarter revenues growth between 25% and 27% year-over-year for the sales figure to be as high as $2.7 billion, slightly higher than its December projection. However, the company is anticipating gross margins to decrease between -0.9% and -1.1% , compared to its prior forecast of positive growth between +0.1% and +0.2%.
According to Lululemon, it would offset the fourth quarter margin narrowing with accelerated cost cuts. The company further said that it expects earnings to come in between $4.22 and $4.27 per share, compared to its December guidance of between $4.20 and $4.30 per share.