Lululemon updated their 4th Quarter guidance today, to below their third quarter estimates. Predictably, analysts and reporters are blaming declining sales on lululemon losing customers to the March sheer pants and November Wilson fat thighs issues but I honestly don't think the public's memory is that long lasting. The CFO, John Currie's, statement backs me up on this: "We were on track to deliver on our sales and earning guidance though the month of December; however, since the beginning of January, we have seen traffic and sales trends decelerate meaningfully. Based on this recent performance and assuming these trends continue through the remainder of Janyar, we are reducing our outlook for the fourth quarter."
Close observers of the company, which includes all of you who read this blog, have noted how odd the January product release has been. Though, to be honest there were issues in December, too. There has been a mishmash of colors - Fresh Teal, Lavender Dusk, Pink Zing, Baroque Blue, Power Purple, Guava Lave - that don't seem to make a cohesive "collection". There have also been missing products - such as the size ten Parallel Stripe Wunder Under crops that never made it to North America though we did get size ten in the Wunder Under pants. I've been following lululemon for quite some time and can't recall a Wunder Under crop color not being offered in a size ten before. I know size twelves are routinely excluded, though less these days than in the past, but never a size ten so that was extremely odd. Parallel Stripe Runday crops never made it to Canadian stores and were only available in the on-line store. Guava Lava Swiftly products have not shown up yet even though the headband is in the stores. Pink Zing items are being rolled out very slowly. There is no solid Baroque Blue Cool Racerback, etc., etc. I know it was mentioned in an earlier conference call that lululemon is now inspecting product before it makes it to the store floors so I am wondering if the "missing" items didn't pass muster and they were deleted out of the collections. The product releases have been pretty small, too, and not consistent across all outlets - website, Canadian, and American stores - considering people have Christmas gift cards to spend. I think all these things add up to production issues. The third quarter conference call mentioned that seasonal special items, such as pique Skinny Will pants or parallel Wunder Unders, have sold extremely well, so people are buying the more "special" items but I think the lackluster January sales are due in large part to lack of compelling product.