Lululemon sales come up short, shares tumble
TORONTO (Reuters) - Lululemon Athletica Inc's LLL.TO (LULU.O: Quote) quarterly profit rose but sales of its signature yoga slightly missed analyst expectations, sending its shares down 16 percent.
It is the second quarter in a row that the chain has shown signs of faltering. Catching a wave of popularity for yoga among young professional women, its premium exercise pants and other apparel have gained an enthusiastic following. Lately any signal that its growth might slow has spooked investors.
The Vancouver-based company said on Thursday revenue rose 31 percent to $230.2 million in its third quarter ended October 30. Analysts on average had forecast $235.7 million, according to Thomson Reuters I/B/E/S.
Sales at established stores rose 16 percent, compared with its own forecast of the low to mid-teens in percentage terms. That was lower that same-store sales growth of 20 percent in the previous quarter.
Looking ahead, the company made a low to mid-teens forecast for the current quarter.
"Lulu remains an attractive growth story, in our view; however, today's numbers likely won't be enough to keep the stock going at its current multiple," Nomura analyst Paul Lejuez wrote in a research note.
Chief Executive Christine Day said the company had not been able to meet sales demand in the quarter. Lululemon has struggled to catch up on inventory since the end of 2010, when it posted particularly strong sales. Day said the situation has improved in the current quarter.
"Our goal for Q4 was to break the inventory cycle we were in all year, and we have achieved it," she said. "We have the right mix of styles and color, and a healthy and clean inventory."
Lululemon has expanded rapidly in Canada, the United States and Australia. The company opened or acquired 18 stores in the quarter, bringing its total to 165. Continued...