Lululemon Athletica LULU.O forecast current-quarter revenue and profit below Wall Street estimates on Thursday, as shoppers curb spending on higher-priced clothing and accessories due to decades-high inflation, sending its shares down 10%.
High inflation, rising interest rates and the threat of a recession in the United States has resulted in a shift in consumer spending impacting the sales of apparel and sportswear as cash-strapped consumers focus on essentials.
People are restricting themselves from splurging on higher-priced products denting sales at companies like Lululemon that has been raising prices on its products to offset higher freight charges.
Lululemon, however, raised its full-year revenue and profit forecasts and beat third-quarter revenue estimates.
The company forecast fourth-quarter revenue between $2.61 billion and $2.66 billion, compared to analysts’ estimates of $2.65 billion, according to IBES data from Refinitiv.
Lululemon sees fourth-quarter profit between $4.20 and $4.30 per share, compared to analysts’ average estimate of $4.30 per share.
(Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by Maju Samuel)