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Lululemon forecasts flat Q4 same-store sales; shares tumble

A customer enters the Lululemon store in downtown Vancouver, British Columbia November 8, 2013. REUTERS/Andy Clark
A customer enters the Lululemon store in downtown Vancouver, British Columbia November 8, 2013. REUTERS/Andy Clark

TORONTO (Reuters) - Lululemon Athletica Inc said on Thursday it expects flat same-store sales in the crucial fourth quarter, sending its shares sharply lower even as the Canadian yogawear chain reported third-quarter earnings that beat expectations.

The sales forecast is a big reversal for Lululemon, which not long ago was posting same-store sales growth well into double digits. It was hit by an embarrassing recall this year after some of its signature black pants proved too see-through.

Shares of the company, which named a new chief executive earlier this week, slid 10.7 percent to $61 in trading before the morning bell on the Nasdaq.

For the current quarter, which includes the holiday shopping season, it forecast earnings between 78 and 80 cents a share, and revenue from $535 million to $540 million. Analysts had been expecting earnings of 84 cents a share on revenue of $571.8 million.

Net income for the third quarter rose to $66.1 million, or 45 cents per diluted share, from $57.3 million, or 39 cents, in the same period a year ago.

Revenue rose 20 percent to $379.9 million. Sales at established stores rose 5 percent.

Analysts, on average, had been expecting earnings of 41 cents a share on revenue of $376.2 million, according to Thomson Reuters I/B/E/S.

(Reporting by Solarina Ho and Allison Martell; Editing by Jeffrey Hodgson and James Dalgleish)

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