Lululemon Athletica Inc said on Monday it expects holiday-quarter gross margins to decline as the apparel maker grapples with increased costs amid a drop in consumer spending due to stubbornly high inflation.
A Lululemon store in the CF Toronto Eaton Centre shopping mall in Toronto, Ontario, Canada December 13, 2021. REUTERS/Carlos Osoriosaid on Monday it expects holiday-quarter gross margins to decline as the apparel maker grapples with increased costs amid a drop in consumer spending due to stubbornly high inflation.A sharp rise in inventory levels has forced several retailers to offer discounts and mark down prices to clear excess stock, a move that has dented margins across the apparel sector.
"Our concern with Lululemon, despite how strong they have been performing in recent quarters, has been the amount of inventory that they have," said Jane Hali and Associates analyst Jessica Ramirez, adding that excess inventories is where the issue with gross margin is stemming from.
Lululemon, however, raised its fourth-quarter net revenue forecast to between $2.66 billion and $2.70 billion, from its previous range of $2.61 billion to $2.66 billion. It also tightened its outlook for fourth-quarter earnings per share to between $4.22 and $4.27, compared with its prior forecast of $4.20 to $4.30.
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