Lululemon Shares Drop After Guidance Cut, 3Q Profit Fall

Lululemon Athletica on Wednesday posted a 12% decline in its third-quarter profit, trimmed its earnings forecast for the year and gave downbeat guidance for the current quarter. Though results in its latest quarter met or beat expectations, the new outlook sent shares down 8% premarket Wednesday. For the full year, Lululemon expects earnings of $1.81 to $1.84 a share, down from a previous forecast of $1.87 to $1.92 a share. The Vancouver company, known for its yoga apparel, estimated revenue in the range of $2.03 billion to $2.04 billion, with same-store sales up in the high-single digits on a constant-dollar basis. The company had previously forecast sales of $2.03 billion to $2.06 billion. In the fourth quarter, Lululemon estimates sales in the range of $670 million to $685 million, with same-store sales up in the mid-single digits on a constant-dollar basis. The company expects earnings of 75 cents to 78 cents a share. Analysts are looking for earnings of 85 cents a share on $690 million in revenue. Lululemon has been working to retool its image after it had to recall some yoga pants in 2013 for being too sheer and as shoppers' preference has shifted from basics to more elaborate designs. Lululemon has revamped its product line to include more patterned items, and it has worked to grow its men's and children's businesses. Overall for the third quarter, Lululemon posted a profit of $53.2 million, or 38 cents a share, down from $60.5 million, or 42 cents a share, a year earlier. Revenue rose 14% to $479.8 million. Sales at stores open at least a year were flat in the third quarter but rose 6% for the second quarter in a row on a constant-currency basis. Chief Executive Laurent Potdevin said results were in line with the company's expectations and pointed to "major store openings around the world." Lululemon, which had forecast earnings of 35 cents to 37 cents a share on revenue of $477 million to $482 million, opened 18 new stores in the third quarter. Mr. Potdevin said the company implemented "critical organizational changes" in the quarter, and said the management team "is aligned with our strategic global priorities." Write to Anne Steele at Anne.Steele@wsj.com