Dive Brief:

• After a strong start to the holidays, Lululemon has felt the effects of the omicron COVID-19 variant on its operations, according to a press release Monday.  
• Those effects include "increased capacity constraints, more limited staff availability, and reduced operating hours in certain locations," CEO Calvin McDonald said in the release.
• The athleisure brand signaled to investors that its fourth quarter revenue would fall at the low end of its guidance, which estimated the figure at roughly $2.1 billion to $2.2 billion.

Dive Insight:

The COVID-19 surge brought on by omicron has far outstripped anything that came before in terms of the number of cases. It has also served as a painful reminder that the pandemic is still with us indefinitely. But the disruptive effects on retail are different, and more subdued, compared to past phases of the pandemic. 

Lululemon serves as an illustration. As with most of the retail world, Lululemon closed its entire store footprint in March 2020, as COVID-19 was gaining a foothold in the U.S., and it didn't fully re-open its store base until that summer. 

The era for large-scale closures has, for the time being at least, passed. But McDonald's statement shows how operations can still be disrupted by the virus, including through staff shortages as workers wrestle with virus infections and quarantines.

The company also said after its Q3 earnings that while most stores remained open, some locations were temporarily closed based on local government and health authority guidance, though it didn't say how many or where. 

Lululemon is by no means alone. Walmart, for example, has closed some stores temporarily amid omicron's spread, and Macy's has reduced store hours.

The impact on retailers is likely to vary by locality and the retailer itself. For Lululemon, timing may have played a role in the effect on sales. Credit Suisse analyst Michael Binetti said in an emailed note, "We think [Lululemon's] more sensitive vs peers to store sales in the 3-4 days before [Christmas] that were abruptly impacted by Omicron."

Overall, Lululemon sought to paint a positive picture of its performance during the holidays and over 2021. McDonald said in the release, "We are closing out a strong 2021 in the coming weeks, and we're pleased with how lululemon has delivered over the course of the year."

Still, investors took the news hard, with the company's stock falling 6% just in premarket trading after the company's announcement Monday.  

On the whole, omicron likely represents a speed bump for Lululemon. Even with its tempered expectations for Q4, J.P. Morgan analysts led by Matthew Boss estimate the guidance puts Lululemon's two-year compound annual growth rate at 23.3%, which surpasses pre-pandemic levels. 

The company has managed to shrug off multiple disruptions since the start of the pandemic. It posted very strong revenue and profit numbers for Q3 despite a tough supply chain environment and the struggles of its recently acquired Mirror unit.