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Lululemon really wants to clear out inventory. The fitness brand announced its third quarter fiscal 2015 results today, and during its investors call, Lululemon stated that it plans to hold more warehouse sales in the fourth quarter to clear out excess inventory. Specifically, Lululemon plans to hold two more warehouse sales, one in the US and one in Canada, within the next three to four months.
"We are taking steps with regards to markdowns to make sure that we are staying on track with the clearance goals that we have to move through inventory we have in an orderly manner," CFO Stuart Haselden said during the presentation.
Lululemon's been marking down items and adding to its clearance racks more lately than it has in the past, which makes it vulnerable to the same problems that are currently plaguing retailers like J.Crew, Gap, and Banana Republic — if sales become the norm, then it's really hard to convince shoppers to pay full price for anything, ever.
However, Lululemon's CEO Laurent Potdevin noted that sales in women's pants and bras are up 27% and 18%, respectively, underscoring the company's ability to produce products that shoppers go crazy over. "Clearly what we've learned and what we've known all along and probably lost our way the past three years, is that when we are bold and innovative, our guests respond really well," Potdevin said. "And the response to the launch of the pant wall has been fantastic."
Retail analysts weren't enthusiastic about the call, though:
$LULU on this path: - Discounts inventory for next - 4 quarters to normalize levels - Customer gets used to it - Sale death spiral— Michael (@sternalot) December 9, 2015
$LULU #10: Women's pants +27% comps / Bras +18% comps / men's +24%. Yet, total company comps only +9%. How bad is the rest of the biz? Ugly.— Rob Wilson (@RetailRobWilson) December 9, 2015
We have a new nomination for worst #retail conference call of 2015— Stacey Widlitz (@StaceyRetail) December 9, 2015