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LULU Shares Down Over 6%, Lululemon Expects Low Q4 Earnings due to Omicron Variant  

UTC by Ibukun Ogundare · 3 min read
LULU Shares Down Over 6%, Lululemon Expects Low Q4 Earnings due to Omicron Variant  
Photo: Depositphotos

The CEO of Lululemon Calvin McDonald said that the company is “closing out a strong 2021 in the coming weeks.”

Today, American-Canadian apparel company Lululemon Athletica (NASDAQ: LULU) saw a fall in its shares during premarket trading sessions due to possible low earnings and revenue in Q4. The retailer revealed that it expects its earnings and revenue for the fiscal Q4 to be at the lower end of predicted estimates. According to the apparel company, the resurfacing of more Coronavirus cases in the US has caused a shortage of staff and reduced store hours. Lululemon shares dropped 6.25% to $332.60 in premarket trading after it closed down 3.7% to $355.21 on Friday.

Lululemon Lost Over 6% in Shares Price in Anticipation of Low End of Ranges in Q4 Profits

In a press release published on the 10th of January, Lululemon updated its revenue and earnings inspections for the fiscal Q4. The multinational company now expects its net revenue to be around the low end of its range of $2.125 billion to $2.165 billion. At the same time, the apparel company is expecting its diluted earnings per share to be toward the low end of its range of $3.24 to $3.31. Also, Lululemon Athletica looks forward to adjusted diluted earnings per share at the low end of its range of $3.25 to $3.32.

Based on estimates by Rifinitiv, analysts were expecting adjusted earnings of $3.34 per share on $2.17 billion sales.

The CEO of Lululemon Calvin McDonald said that the company is “closing out a strong 2021 in the coming weeks.”

He explained:

“We started the holiday season in a strong position but have since experienced several consequences of the Omicron variant, including increased capacity constraints, more limited staff availability, and reduced operating hours in certain locations. I am proud of how our teams continue to deliver for our guests, and we are excited about what the future holds for Lululemon.”

The widespread use of the omicron variant has affected many retailers as they face labor problems. With increasing cases in the US, companies staff take breaks as they become sick after getting exposed to the disease. Department store company Macy’s (NYSE: M) has shortened store operation hours for the rest of the month. The new move affects several of the company’s stores in several locations in the US. In addition, Walmart (NYSE: WMT) temporarily shut down about 60 sites last month, where coronavirus cases were most rampant.

Companies See Shortage of Staff With Increasing Cases of Omicron Variant

More companies suffer from the persisting global health crises. Nike (NYSE: NKE) and Starbucks (NASDAQ: SBUX) now have fewer staff members to manage some of their stores. As a result, Starbucks trimmed operating hours in those locations with insufficient hands to keep operations up.

Lululemon shares have been declining over the past year. The company’s stock has fallen 1.78% in the last twelve months, dropping more than 9% since the year began. As Lululemon shares plunged 7.99% in the last three months, the apparel company also lost 12.02% over the past month. In the last five days, LULU stock has shed about 8.35%.

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Ibukun Ogundare

Ibukun is a crypto/finance writer interested in passing relevant information, using non-complex words to reach all kinds of audience. Apart from writing, she likes to see movies, cook, and explore restaurants in the city of Lagos, where she resides.

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