Lululemon warns of slowdown in athleisure sales amid Omircon variant

Lululemon has warned of a slowdown in the sales athleisure as the new Omicron variant spreads throughout the globe.

In previous lockdowns, people who were stuck at home switched out dressier clothes for athleisure products including hoodies and leggings, benefitting brands including Lululemon and its rival Peloton.

While the initial news of a new coronavirus variant and potential lockdowns could see a repeat of the trend, Lululemon believes that new variants could further impact the already devoted supply chain and lead to temporary closure of stores.

The Omicron variant was first detected in Southern Africa and has caused concern over the recovery of the global economy.

Lululemon has had to move its production out of Vietnam after pandemic-fuelled lockdowns prompted factory closures in the nation.

READ MORE: Peloton sues Lululemon to protect its sportswear patents

Companies are also having to use air freight solutions, which are vastly more expansive.

“Demand for our brand is outpacing supply, and our business could have been even stronger without the supply chain challenges,” Lululemon chief executive officer Calvin McDonald told analysts.

Lululemon’s shares fell 2% to $408 in extended trading, as the company also slashed sales outlook for its Mirror home-fitness platform.

While the brand’s remaining factories in Vietnam have reopened, lingering effects of lockdowns have caused bottlenecks and delays in delivery before the holiday season, McDonald added.

Despite this, Lululemon has raised its fiscal 2021 revenue forecasts to between $6.25 billion and $6.29 billion, largely in line with estimates.

The company’s revenue rose to $1.45 billion in the third quarter, compared with estimates of $1.44 billion. On an adjusted basis, the company earned $1.62 per share, beating estimates of $1.41.

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