Lululemon Profit Warning, what you need to know.
@Just Do It:
Last night $Lululemon Athletica(LULU)$ issued a profit warning for the fourth quarter, causing the stock to plunge 9%, mainly because the company's high profitability, of which it has always been proud, fell short of expectations in the fourth quarter. Gross margin is now expected to decline 90 to 110 basis points in the fourth quarter, compared to previous guidance of a 10 to 20 basis point increase. The industry-beating profitability has always been a key reason why investors like lulu. lulu's gross margin of 56% and EBIT Margin of 21% are above the industry median of 58% and 169% respectively. This means that while Lululemon's strong brand equity may protect the company from a sharp profitability squeeze, Lululemon's rich margins are likel