Lululemon Stock Drops 16% Despite Earnings Beat, as Guidance Is Lighter Than Wall Street Expected

Lululemon Athletica (NASDAQ: LULU) stock dropped 15.8% on Friday, following the activewear specialist's release on the prior afternoon of its report for the fourth quarter of fiscal 2023, which ended Jan. 28. (You read these numbers correctly -- fiscal year 2023 includes about a month of calendar year 2024.)

The stock's decline is attributable to guidance, not to the fourth-quarter's results. Management's outlook for the first quarter and full year of fiscal 2024 was lighter than Wall Street had expected for both revenue and earnings. The fourth-quarter's results, on the other hand, beat the analyst consensus estimates for the top and bottom lines.

For some time, consumers have been cutting back their spending on apparel and other discretionary products due in part to uncertainties about the macroeconomic environment. They've also been shifting their disposable income spending more toward services and experiences since the pandemic subsided. Up until now, Lululemon has managed to perform very well despite the challenging macro environment for its industry. However, its fourth-quarter results in its core Americas market and its outlook suggest the company hasn't fully escaped the macro headwinds that others in its industry have been facing in recent years.

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Source Fool.com