Lululemon, Abercrombie Warn of Omicron Impact on Holiday Sales

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Retailers say fourth quarter sales will not be as strong as expected, citing staff shortage or inventory crunch

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Lululemon said it expects results for the coming quarter toward the low end of its forecasts. In early December, Lululemon said it was expecting revenue of $2.13 billion to $2.17 billion over the three-month period, with adjusted earnings per share of $3.25 to $3.32.

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Abercrombie now predicts that net sales in the January-ended quarter will be flat, down 2% compared to 2019 levels. Previously, it estimated net sales to be in the range of 3% to 5% over two years.

“We didn’t have enough inventory to keep pace with customer demand, resulting in decreased sales during peak holiday selling periods,” said CEO Fran Horowitz.

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Some large retail chains like Walmart Inc.

and home depot Inc.

Were able to overcome many supply-chain problems in early 2021 by importing goods or leasing their own vessels around the port backlog. but the gap Inc.

And other smaller chains warned that they may not have enough goods in stores for the holidays.

The Omicron wave has sent COVID-19 cases in the US to unprecedented levels, leaving companies scrambling to keep their operations afloat as the virus disrupts the lives of employees and customers.

Discount chain Big Lots Inc also cut its fourth-quarter financial estimates on Monday, citing a slowdown in sales since early January, saying it attributed the weather and the rapid spread of the Omicron variant.

Some forecasters have expressed concern that Omicron could exacerbate tightness in supply chains and labor markets already thinned by the pandemic situation. Monthly employment data released Friday suggested companies are competing for a limited pool of workers, with wages up 4.7% over the previous month.

Guidance from the Centers for Disease Control and Prevention last month shortened the time people were asked to self-isolate after contracting COVID-19, opening the door for people to return to work faster after infection. Revealed.

Lululemon posted solid sales growth in each of the first three quarters of the fiscal year, with revenue up double-digit year over year in each three-month period. Fourth-quarter sales of $2.13 billion, at the low end of Lululemon’s forecast, would still mark an increase of about 23% over 12 months.

Since early 2020, Vancouver, British Columbia-based Lululemon has personally won over the decline of work as shoppers traded khakis and dresses for sweatpants and T-shirts. Like other retailers, Lululemon also benefited from an increase in online ordering.

Omicron’s recent drag on Lululemon provides evidence that the latest Covid-19 wave is once again denting personal selling for retailers across the board.

“I think Lululemon is one of the best-in-class operators, a brand that has tremendous momentum,” said Stifel analyst Jim Duffy. “If Omicron is affecting them, it’s definitely affecting others.”

Shares of Lululemon fell about 2% on Monday, offsetting some of the losses earlier in the day. Abercrombie and Big Lots released their updates after the market closed. Shares of Abercrombie were up about 6% in after-hours trading, while Big Lots lost about 7%.

Write Matt Grossman at [email protected]

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