People walk by a Lululemon Athletica store in Manhattan, New York, U.S., December 7, 2021. REUTERS/Andrew Kelly

TORONTO, Sept 2 (Reuters Breakingviews) - Like a small leggings tear, Lululemon Athletica’s (LULU.O) inventory issues could unravel. The $41 billion yoga-pants maker’s second-quarter revenue increased 29% from a year earlier, to $1.9 billion, and it raised full-year profit and top-line forecasts. The outlook sits in stark contrast to rival Peloton Interactive (PTON.O), which chases similar fitness enthusiasts read more .

As with many retailers, though, Lululemon stores are piling up with goods. Quarterly inventory jumped 85% from the second quarter of 2021 to $1.5 billion. It’s on track to be even higher in the third quarter before growth starts decelerating.

Boss Calvin McDonald is taking the matter in stride, saying supply-chain issues left the Vancouver-based company unable to satisfy last year’s demand. The improved financial outlook was enough for investors to push Lululemon shares up 9%. And yet inventory will reach as much as triple the level three years ago, per Credit Suisse analysts.

Even in the face of inflation, Lululemon’s well-heeled customers keep buying workout staples that don’t typically go out of style, obviating the need for discounts. That could soon change for some of its more aspirational clientele, however, evidenced by gluts at Under Armour (UAA.N) read more , Macy’s (M.N) and beyond read more . In that sense, McDonald is stretching the inventory logic. (By Sharon Lam)

Capital Calls - More concise insights on global finance:

Starbucks CEO rewards trumps even generous Reckitt read more

Premier League spending spree is a step backwards read more

Disney’s synergy Force may stumble in Prime time read more

Crypto fans still live in a supervised world read more

New Saipem CEO’s recovery efforts will be a slog read more

Our Standards: The Thomson Reuters Trust Principles.

Starbucks found a new partner to lead its tough makeover. The $98 billion coffee chain on Thursday named Reckitt Benckiser’s outgoing boss Laxman Narasimhan as its next chief executive, taking over from interim CEO and long-time Starbucks leader Howard Schultz next April. He will have to deliver more and faster Frapuccinos with a restless workforce and rising costs. With Schultz still hanging around, Narasimhan is under the gun.

Reuters, the news and media division of Thomson Reuters, is the world’s largest multimedia news provider, reaching billions of people worldwide every day. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers.

Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology.

The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs.

The industry leader for online information for tax, accounting and finance professionals.

Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile.

Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts.

Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks.

All quotes delayed a minimum of 15 minutes. See here for a complete list of exchanges and delays.