Lululemon Athletica inc. (LULU) Earnings: An Early Look

Lululemon Athletica inc. (NASDAQ:LULU)’s success has also inspired competitors to take direct aim at its yoga niche. The Gap Inc. (NYSE:GPS) has launched its Athleta brand to go up against Lululemon, boosting its store count by 250% and contributing significantly to Gap’s overall recovery during 2012. Meanwhile, sports specialist NIKE, Inc. (NYSE:NKE) has followed Lululemon’s model by bring on a yoga ambassador to help with its line of yoga clothes, and Under Armour Inc (NYSE:UA) has come out with its own line of women’s workout-wear that adds even more options for discriminating shoppers.

Just yesterday, Lululemon announced more trouble ahead, releasing early guidance for the current quarter. The company said that quality-control issues forced it to recall some of its Luon line of pants and crops because of what it called “a level of sheerness … that falls short of our very high standards.” Although it had expected comps to rise 11%, Lululemon Athletica inc. (NASDAQ:LULU) said that because of the incident, it now expected a 5% to 8% increase in same-store sales, with revenue falling $10 million to $20 million the midpoint of its previous range.

In its quarterly report, watch for Lululemon Athletica inc. (NASDAQ:LULU) to give more color about the Luon recall and its impact on sales going forward. With the stock highly sensitive to growth disruptions, the incident might well give interested investors a nice buying point — assuming that the quality-control issues that allowed it to happen don’t become a recurring issue.

The article lululemon athletica Earnings: An Early Look originally appeared on and is written by Dan Caplinger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool recommends lululemon athletica, Nike, and Under Armour and owns shares of Nike and Under Armour.

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