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Lululemon continues to struggle in first quarter

Despite announcing a $450 million share buyback program in conjunction with its first-quarter results, Lululemon’s shares dropped 10% as it continues trying to regain its footing in an increasingly competitive field.

Net revenue for the quarter increased 11% to $384.6 million from $345.8 million in the prior-year quarter. Sales at stores and online inched up 1%, primarily driven by an online sales increase of 25%, which offset a 4% decrease same-store sales.

But the company, which doesn’t anticipate solving its supply chain issues until 2015, has reduced its outlook for the year. It now anticipates revenue to be in the range of $1.77 billion to $1.80 billion, with adjusted earnings of between $1.71 per share and $1.76 per share — down from its earlier forecast earnings of $1.80 to $1.90 per share on revenue of $1.77 billion to $1.82 billion.

The company also said that CFO John Currie has voiced his plans to retire by the end of the fiscal year. The company will engage a leading executive search firm to initiate an open and comprehensive search for Currie’s replacement.

Lululemon CEO Laurent Potdevin highlighted the positives.

"We are pleased that Q1 results were slightly ahead of our expectations. 2014 is very much a transitional year for lululemon, and we are on track with the improvements we have set out to achieve,” he said. “We are focused on building a scalable foundation to further elevate our North American business and pursue the brand's incredible international potential."

Just a day ago, Lululemon’s founder and largest shareholder Chip Wilson voted against the re-election of Michael Casey and RoAnn Costin to the company’s board of directors. Wilson criticized the board saying it was too focused on short-term results at the expense of product, culture and brand and longer-term corporate goals.