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Lululemon Athletica warned on Thursday it expects flat same-store sales in the crucial fourth quarter due to "macro and execution issues" and cut its full-year outlook, sending shares of the trendy Canadian yogawear chain tumbling.
The warning came even as the retailer, which was hit by an embarrassing recall in March when some of its signature black pants proved too see-through, 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.
(Read more: Lululemon founder steps down as chairman)
Shares of the company, which named a new chief executive earlier this week, slid 8.4 percent to $62.60 in trading before the morning bell on the Nasdaq. (Click here to get the latest quotes for Lululemon.)
"The guidance—it's clearly a source of concern. Flat comps suggest there's been a change in consumer demand for the product," said Christian Buss, an analyst with Credit-Suisse.
Lululemon has been plagued by problems throughout the year. The earlier recall spawned supply chain snags and delivery delays. It had already cut its full-year forecast in September.
Chief Executive Christine Day said in a statement that the fourth quarter is being hit by "macro and execution issues."
Buss noted that while the overall retail environment has been challenging, it did not explain away the outlook.
"Historically they have not been affected by the vagaries of the underlying mall environment," he said.
Last year's fourth quarter was itself disappointing. Day said last January that some of the chain's new products had fallen flat and that the company needed to make sure it carried enough goods at "gift-giving price points."
For the current quarter, which includes the holiday shopping season, Lululemon 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.
For fiscal 2013, which ends around February, the retailer now projects net revenue to be between $1.605 billion and $1.610 billion, down from an already lowered forecast of $1.625 billion to $1.635 billion.
Diluted earnings per share are forecast to be between $1.94 and $1.96 for the year.
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.