Lululemon Hit Hard By Omicron

Lululemon released preliminary earnings for its fiscal fourth quarter ending Jan. 31 and expects net revenue to be on the lower end of its previous guidance – between $2.125 billion and $2.165 billion.

CEO Calvin McDonald attributed the low estimate to “several consequences of the Omicron variant, including increased capacity constraints, more limited staff availability, and reduced operating hours in certain locations.”

Nike and Athleta have reportedly seen a similar trend.

If Lululemon is able to reach its predicted range, the company’s holiday revenue will still beat its third-quarter revenue of $1.5 billion — a 30% year-over-year increase.

More Obstacles Ahead

The low guidance isn’t the only problem the athleisure company is facing.

• Peloton sued the company in November for infringing intellectual property rights regarding its new apparel line. Lululemon countersued the next day.
• Last week, the company was sued by Nike for patent infringement related to Lululemon’s Mirror Home Gym, alleging use of the same technology. 

Lululemon, which acquired Mirror for $500 million, previously cut the brand’s sales outlook to between $125 million and $130 million — not even half its original projection of $275 million.