January 9, 2017 / 11:31 AM / 2 years ago

Canada's Lululemon Athletica narrows fourth-quarter forecast range

(Reuters) - Canadian yoga and leisure apparel retailer Lululemon Athletica Inc (LULU.O) said on Monday it had narrowed the range of its profit and revenue forecasts for the fourth quarter of 2016.

People walk past a store of yogawear retailer Lululemon Athletica in downtown Vancouver June 11, 2014. REUTERS/Ben Nelms

The yogawear maker now expects its fourth-quarter net revenue to be $775 million-$785 million, from the company’s previous forecast of $765 million-$785 million.

“We had a strong holiday season in both our store and digital channels”, Chief Executive Laurent Potdevin said in a statement.

Lululemon also narrowed its fourth-quarter earnings to $0.99-$1.01 per share from its previous forecast of $0.96-$1.01, per share.

However, investors shrugged off the news amid reports from various apparel retailers of weak holiday season sales and lower spending on apparel.

Lululemon shares fell as much as 1.6 percent to $67.15 in morning trading, but later reversed course to trade up 0.1 percent. Up to Monday’s close, the retailer’s shares had risen 24.3 percent in the last 12 months.

“Following a generally disappointing holiday across retail, investors are skeptical about buying anything in the sector right now,” Instinet analyst Simeon Siegel said.

The retailer, which competes with Nike Inc (NKE.N) and Under Armour Inc (UA.N) in the lucrative athleisure market, reported better-than-expected third-quarter profit in December on higher gross margins and sales.

The company began by carving out a niche market of expensive women’s yoga pants before expanding into other areas. It helped push athleisure wear into mainstream fashion and now competes in a crowded market.

Lululemon’s international success helped turn the Vancouver-based retailer into an investor favorite, but struggles with inventory, embarrassing product recalls, and executive changes in recent years have blemished its once-stellar record.

Reporting by John Benny and Komal Khettry in Bengaluru; Editing by Shounak Dasgupta

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