Add Lululemon Athletica to the growing list of companies that were forced to reduce business hours during the key holiday quarter because of staff shortages fueled by the ongoing Omicron surge—and are grappling with a hit to sales as a result.
The athletic-wear company has withstood the pandemic very nicely, but on Monday disappointed Wall Street when it said that its holiday season results would come in at the low end of a range Lululemon had previously given, pointing to the impact of Omicron.
“We started the holiday season in a strong position but have since experienced several consequences of the Omicron variant, including increased capacity constraints, more limited staff availability, and reduced operating hours in certain locations,” Lululemon chief executive officer Calvin McDonald said in a statement. The company expects fourth-quarter net revenue to be near the low end of its range of $2.125 billion to $2.165 billion. Shares were down 6% in morning trading.
COVID-19 case counts exploded at the peak of the Christmas spending period in the second half of December, according to New York Times tallies, and the problem has only gotten worse. The current U.S. seven-day average for new cases exceeds 700,000, surely an undercounting since it does not include at-home tests. The impact has been swift for retailers and restaurants as they have dealt with employees calling in sick, taking measures including reducing store hours and in same cases, closing some stores.
Last month, Walmart said it was temporarily closing 60 of its stores in COVID outbreak hot zones to sanitize them. Apple closed its New York City flagships at the height of Christmas shopping, while companies including Nike, Gap Inc.’s Athleta chain, and Starbucks have cut store hours, often forced to do because of staff shortages. The challenges are continuing into January, which is at least a quiet month for retailers: Macy’s has reduced business hours at a number of locations around the country.
At the same time, Omicron could provide some retailers with an excuse for their own lackluster execution. After all, the 2021 holiday season was the best in years, with Mastercard SpendingPulse estimating that retail sales rose 8.5% between Nov 1. and Dec. 24.
Still, the COVID case spike, coupled with ongoing shortages of workers, is taking a toll on consumer-facing businesses. Walgreens, for instance, told loyalty program members on Tuesday by email that “we owe it to you to recognize the challenges we as a company have faced during the pandemic, including longer lines, out-of-stock items, and delayed appointments.” Delta Air Lines also told customers last week that “the rapidly spreading Omicron variant put extraordinary pressure on our operation, our employees, and customers like you.”
Meanwhile, Alaska Air Group last week cut 10% of its remaining January flights because of an “unprecedented” number of employees calling in sick. And restaurant chain Denny’s said this week that Omicron has caused “near-term uncertainty” for its business, Bloomberg reported.
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