Lululemon to Cut Guidance Next Week: Read By Investing.com

lululemon athletica (NASDAQ: ) is expected to cut its full-year guidance next week due to recent execution missteps and growing competitive pressures, according to analysts at Citi.

The company, which is set to report its second-quarter earnings on Aug. 29 after the close, is expected to deliver earnings per share (EPS) that are relatively in line with consensus estimates.

However, Citi believes the real focus will be on the company’s revised outlook for the rest of the fiscal year.

Analysts noted that Lululemon’s recent decision to pull the much-anticipated launch of Breezethrough leggings from stores and e-commerce could have significant implications for the company’s second-half sales and margins.

“This latest execution misstep highlights potential issues facing LULU that could hurt sales/margins longer term (internal talent issues while facing more competition),” Citi wrote .

Investors widely expect Lululemon’s management to cut its full-year 2024 guidance, though the extent of the cut is still up for debate.

The investment bank’s forecast for Lululemon’s fiscal 2024 EPS was revised down to $13.24, significantly below the company’s current guidance of $14.27 to $14.47 and below the consensus estimate of $14.13.

Analysts expect Lululemon to cut its sales guidance for fiscal 2024 from previously anticipated 11-12% growth to single digits, reflecting weaker global comparable sales.

The bank also anticipates that management will reduce selling, general and administrative (SG&A) expenses in response to a lower outlook.

Looking ahead, Citi remains cautious on Lululemon’s near-term outlook, lowering its price target for the stock to $270 from $300. Analysts expect management to provide below-consensus guidance for the third quarter, further reflecting the challenges the company faces in a more competitive retail landscape.