TORONTO, (Reuters) - Lululemon Athletica Inc LULU.O trimmed its revenue and earnings forecast for the fiscal year on Thursday, a fresh sign that the once-flying yogawear maker was still struggling to return to strong growth in an increasingly crowded field.
Shares of the company fell more than 10 percent to $40.10 in trading before the morning bell on Thursday in New York, even as the company announced a $450 million share buyback program and posted quarterly results that topped expectations.
"As we move into 2014, we are reflecting on our learnings with humility, and are entirely focused on our future," Chief Executive Laurent Potdevin said in a statement.
Potdevin admitted to investors earlier this year that the company - which essentially created the lucrative yogawear market - was "not the only game in town anymore."
Rivals such as Gap Inc, Under Armour, VF Corp and even department stores are all jumping into the fray with their own, more affordable, versions.
Lululemon's results come a day after its founder and largest shareholder, Dennis "Chip" Wilson, announced he had voted against the reelection of its new chairman and another director. He publicly criticized the board for being too focused on short-term growth.
The company now expects revenue for the year to be in the range of $1.77 billion to $1.80 billion, with adjusted earnings of between $1.71 per share and $1.76 per share. It had earlier forecast earnings of $1.80 to $1.90 per share on revenue of $1.77 billion to $1.82 billion.
Analysts on average had expected earnings of $1.89 a share on revenue of $1.8 billion, according to Thomson Reuters I/B/E/S.
SUPPLY CHAIN WOES
The reputation of Vancouver-based Lululemon, which once inspired a cult like following among its customers, was badly tarnished by an embarrassing recall in March 2013 of yoga pants that were deemed overly transparent.
For more than a year, it has worked to smooth out quality and supply-chain issues, battle lawsuits, deal with departing executives and face backlash after Wilson touched a nerve with loyal customers, saying that "some women's bodies just actually don't work" for Lulu's pant."
Despite efforts to regain its stride, some traders and analysts are still skeptical about Lululemon's prospects. The stock was one of the most heavily shorted companies in North America among those reporting earnings this week as some traders bet there was more bad news to come.
The retailer had previously said it would not fully resolve its supply chain issues until 2015.
QUARTERLY RESULTS
Excluding a one-time adjustment for planned repatriation of foreign earnings, the company said its profit in the quarter was 34 cents a share. Analysts on average were expecting earnings of 32 cents a share according to Thomson Reuters I/B/E/S.
On a net basis, profit in the fiscal first quarter ended May 4, fell to $19 million, or 13 cents per share, down from $47.3 million, or 32 cents per share, a year earlier.
Revenue rose 11 percent to $384.6 million, the Vancouver-based company said.
Sales at established stores and online sales edged up 1 percent from a year earlier. The company had forecast little change. The small gain came thanks to online sales, which rose 25 percent while comparable sales at corporate stores fell 4 percent.
The company also said its veteran chief financial officer, John Currie, would retire by the end of the fiscal year, ending February 2015.
(Reporting by Euan Rocha and Allison Martell in Toronto and Shubhankar Chakravorty in Bangalore; Editing by Kirti Pandey and Sofina Mirza-Reid)
