Will Lululemon slowdown in fourth quarter

The Vancouver based, yoga-wear retailer, Lululemon Athletica Inc. (NASDAQ:LULU) which has been making double-digit profits for about 13 quarters straight is seeing a slowdown after its fourth-quarter sales was forecasted to be sliding. Its share values were reduced by 3.9 percent to $69.47 on December 5 in New York which is considered to be the lowest closing price. The gain by this Lululemon Athletica Inc. (NASDAQ:LULU) was as much as 63 percent in 2012. The forecast is estimated due to the increase in single-digit percentage rise in same-store sales.

Though the productivity of its current store is considered to be strongest in terms of retail, it is likely to have problem to sustain when the company expands. Moreover, its products might not be appreciated and acknowledged by customers when it enters 15 countries as indicated by an analyst, John Zolidis working for Buckingham Research Group. He also feels that the stock of the company is way too expensive.

It is also estimated that the revenue for the fourth quarter which ends on February 3 will be higher as compared to an initial forecast of $475 million to $480 million. Though the single digit rise in same-store sales is likely to be consistent, an analyst at William Blair & Co., Sharon Zackfia feels that the company’s revenue growth is quite healthy due to its impressive online businesses as well as its U.S. businesses.

The company is planning to have about 201 stores by the end of the fiscal third quarter and has increased its locations by double since three years with an increase in presence in the U.S. and Australia. It is also important to consider that its e-commerce business increased by about 80 percent in 2012 and 14 percent of sales as compared to 10 percent in 2011.

Shares of Lululemon Athletica Inc. (NASDAQ:LULU) declined by 2.92% and ended at $67.44.