Lululemon Athletica Inc. (NASDAQ:LULU) fell more than 9% today after the company provided a disappointing update to Q4 guidance at the ICR conference.
While the company raised its sales guidance by approximately 200bps, it only narrowed its EPS guidance range (to $4.22-$4.27 vs. $4.20-$4.30 prior) due to a cut to gross margin guidance. Specifically, the company now expects gross margin to decline 90-110bps year-over-year, compared to the previous expectation of 10-20bps of expansion. This is particularly disappointing for investors because they missed the gross margin in Q3 as well.