Sportswear retailer Lululemon Athletica cut its earnings forecast on Monday, noting sales and customer visits have slowed down in January after the company founder stepped down last month due to his controversial comments.
Shares for the yogawear retailer declined more than 15% and its fourth-quarter fiscal results will be significantly lower than expected.
Lululemon’s chief financial officer, John Currie, said the company was on track to meet its targets through December but there’s been a drop in overall traffic and sales since the beginning of January.
“We were on track to deliver on our sales and earnings guidance through the month of December; however, since the beginning of January, we have seen traffic and sales trends decelerate meaningfully,” said CFO John Currie in a statement. “Based on this recent performance and assuming these trends continue through the remainder of January, we are reducing our outlook for the fourth quarter.”
Since March, the Vancouver-based company made headlines after it issued a recall – nearly 17% – of its popular black Luon yoga pants from stores and the website. Customers complained about the quality of the pants, saying they were too sheer.
Then, former chairman and founder Chip Wilson suggested that the yoga pants were shaped in mind for smaller women, launching a firestorm against the company.
“Frankly, some women’s bodies just don’t actually work [for the yoga pants],” Chip Wilson said in an interview on Bloomberg TV’s Street Smart. “It’s more really about the rubbing through the thighs, how much pressure is there over a period of time, how much they use it.”
A week later, Wilson apologized for the “repercussion of his actions” but did not apologize for his words.
Lululemon said it expected quarterly earnings between 71 cents and 73 cents per share and its net revenue to range between $513 million and $518 million, down from its prior forecast of 78 cents to 80 cents per share on revenue of $535 million to $540 million for the quarter.
Last month, Lulemon named the former president of TOMS shoes, Laurent Potdevin, as CEO. The company is expected to report final fourth-quarter financial results on March 27.