Omicron came for Lululemon. Which retailer is next?
BNN Bloomberg
Omicron has claimed its first retail victim.
Omicron has claimed its first retail victim.
On Monday, Lululemon Athletica Inc. said that fourth-quarter sales and earnings would be toward the low end of its expectations — quite a surprise considering the company has been one of the industry’s stronger performers, and the holiday shopping season was expected to hold up despite the new variant. The shares fell as much as 9 per cent in early trading.
Lululemon’s caution is a red flag for the rest of the retail, consumer and restaurant sector. Almost two years in, the pandemic still has the power to disrupt trading.
The company best known for its yoga pants said that it started the holiday season strongly. But then it suffered from several effects of omicron, including staffing shortages and reduced operating hours in certain locations. Even before the latest variant, consumer-facing companies were grappling with supply-chain snarl ups and not having enough workers. If these pressures continue, Lululemon won’t be the last to highlight the consequences.
So far, companies with strong brands, such as Nike Inc., and with scale, such as Walmart Inc. and Target Corp., have been able to withstand the supply-chain challenges, while weaker firms have struggled to stay afloat. Last week, Bed Bath & Beyond Inc., which is in the midst of a turnaround plan, cut its sales and profit forecast.
