Lululemon has reduced its full-year guidance due to a sharp decline in profit margins for the third quarter of its fiscal year, ended Nov. 1. The group's turnover advanced by 14 percent to $479.7 million for the quarter. Sales were up by 9 percent in comparable terms and in constant currencies, and the growth was supported by the opening of 65 stores. However, the group's gross margin shrank by 3.4 percentage points to 46.9 percent, which was attributed to increased clearance activity caused by port delays, as well as foreign exchange rate changes and costly international store openings. Lululemon's income from operations amounted to 14.2 percent of sales, down by 5.2 percentage points, and its net income fell by 12.1 percent to $53.1 million for the three months. The company's guidance calls for sales to reach $2,025 to $2,040 million for the full year, down from a previous top guidance of $2,055 million. Earnings per share are predicted to reach $1.81 to $1.84, down from the earlier guidance of $1.87 to $1.92. Another point of concern was a 56 percent rise in inventories, as the company stocked up on products before the Chinese New Year and shifted more shipments from air to ocean freight, temporarily increasing in-transit stock. Lululemon's shares dropped by more than 13 percent on the day of the quarterly publication, but they have since started to recover.

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