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Embattled Lululemon slashes profit outlook, shares tumble Add to ...

These are stories Report on Business is following Monday, Jan. 13, 2014.

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Lululemon cuts outlook
Shares of Lululemon Athletica Inc. plunged today after the retailer cuts its fourth-quarter outlook, warning it has seen store traffic and sales "decelerate meaningfully."

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The yoga wear company said today it now projects sales in a range of $513-million (U.S.) to $518-million, down from its earlier $535-million to $540-million.

Profit is expected to be 71 cents a share to 73 cents, a drop from the earlier 78 cents to 80 cents.

"We're on track to deliver on our sales and earnings guidance through the month of December; however, since the beginning of January, we have seen traffic and sales trends decelerate meaningfully," said chief financial officer John Currie.

"Based on this recent performance and assuming these trends continue through the remainder of January, we are reducing our outlook for the fourth quarter."

Lululemon shares tumbled almost 16 per cent by midday.

Today’s profit warning comes after a string of setbacks for the Vancouver-based yoga wear company.

It has struggled through troubles related to see-through clothing, and a recall, the departure of its chief executive officer, and the resignation as chairman of founder Chip Wilson after he told a TV interviewer that “some women’s bodies just actually don’t work” for its yoga pants, which sparked a backlash.

Its stock sank in mid-December after third-quarter profit climbed to $66.1-million, or 45 cents a share, but at the same time it its full-year sales and profit outlook for the second consecutive quarter.

It based its latest forecast on comparable store sales, a key retailing measure, in the “negative to low-to-mid single digits” for the fourth quarter that ends in early February.

“As we end 2013, we are starting to see the results of the significant investments we mad throughout this past year to strengthen and enhance our back-of-house product operations structure,” Mr. Currie said in a statement today.

“While we realize that it will require continued investment and time to get best-in-class status, with our new leadership in place we are very focused on building on this stronger foundation to executive our long-term growth strategies.”

The company has filled several key positions, including naming Laurent Potdevin as its new CEO early last month.

Goldcorp goes after Osisko
Canada’s Goldcorp Inc. has put a spark into a mining sector that has seen little in the way of deals recently, unveiling an unsolicited $2.6-billion takeover bid for Osisko Mining Corp., whose shares surged on the proposal.

As The Globe and Mail’s Bertrand Marotte reports, Goldcorp announced today that it plans a cash-and-stock offer worth $5.95 a share.

“From a financial and strategic perspective, this offer represents a compelling transaction that is consistent with our strategy of improving the overall quality of our portfolio,” said chief executive officer Chuck Jeannes.

Goldcorp said a takeover would be “consistent” with its strategy of “disciplined portfolio enhancement” and a focus on investing in regions with little political risk.

Beaming ...
Things may be somewhat hostile in the mining sector, but they’re clinking glasses today in the spirits industry.

Shares of Beam Inc. soared today after Japan’s Suntory Holdings Ltd. struck a massive deal to acquire the U.S. spirits giant whose offerings include Jim Beam and Maker’s Mark bourbons, among others.

The combined company will include Laphroaig Scotch, Courvoisier cognac, Bowmore scotch and (we can’t forget this one) Canadian Club whisky.

The deal is $83.50 a share in cash, valued by the companies at $16-billion, including debt.

“I believe this combination will create a spirits business with a product portfolio unmatched throughout the world,” said Suntory president Nobutada Saji.

Brewers fined
You can get away with a lot, but fixing beer prices is just going too far.

If it happened here, it would be downright unCanadian.

Germany’s antitrust police announced today they have fined several brewers and seven people for fixing prices on bottled and draft beer over a two-year period ending in 2008.

The move by the Bundeskartellamt, or Federal Cartel Office was sparked by “an application for leniency” by Anheuser-Busch InBev, which wasn’t fined.

“As a result of our investigations we were able to prove the existence of price-fixing agreement between breweries, most of which were based purely on personal and telephone contacts,” said Andreas Mundt, the president of the Bundeskartellamt.

“The price increases of five to seven euros per hectolitre for draught beer in 2006 and 2008 were agreed on this basis. In 2008, a price increase was agreed for bottled beer with the intention of making the 20-bottle crates one euro more expensive.”

The companies were fined 106.5-million, or the equivalent of about $14.5-million (U.S.).

Chrysler eyes investment
Chrysler Group LLC is looking at an investment of more than $1-billion (U.S.) at its minivan plant in Windsor, Ont., chief executive officer Sergio Marchionne says.

“You can’t do a new minivan for less than $1-billion,” Mr. Marchionne told reporters at the North American International Auto Show in Detroit today, The Globe and Mail's Greg Keenan reports. “It’s a multibillion-dollar commitment.”

But the size of the investment means governments need to step up to the plate with what he called “a partnership” or financial assistance.

The Windsor plant has been one of the most successful and profitable plants in the Chrysler empire for more than three decades under several different ownership groups.

Loonie troubles
Canada’s currency finds itself in interesting company today after getting whacked in the first couple of weeks of the new year.

“On a year-to-date basis, CAD is down 2.7 per cent and is the worst performing global currency (followed by the Guyanese dollar, the Mongolian tugrik and the Argentine peso),” said chief currency strategist Camilla Sutton of Bank of Nova Scotia, referring to the Canadian currency by its symbol.

Her comments came as the loonie, as the dollar coin is known in Canada, continued to trade below 92 cents U.S.

“A weak CAD is indeed good for exporters and economic fundamentals in the medium term; however, the weakening reflects a near-term deterioration in the fundamental landscape, which was highlighted by last week’s economic data releases and relative central bank policy.”

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