Lululemon Athletica (NASDAQ: LULU) stock plunged around 10% in pre-market trading on Monday as the athletic apparel retailer expected a margin squeeze for the seasonally-strong fourth quarter.
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LULU stated that it now expected its Q4 gross margin to decline in the range of 90 to 110 basis points versus its prior expectation of an increase between 10 and 20 basis points.
The company has now forecasted Q4 revenues in the range of $2.66 billion to $2.7 billion, indicating a year-over-year growth between 25% and 27%. LULU’s previous guidance was in the range of $2.605 billion to $2.655 billion.
Diluted earnings are now anticipated to range between $4.22 and $4.27 per share versus its previous guidance in the range of $4.20 to $4.30. LULU’s revised Q4 earnings guidance is below analysts’ expectations of earnings of $4.30 per share.
Wall Street analysts rate LULU a Moderate Buy based on 15 Buys, four Holds, and one Sell.