UPDATE 1-Lululemon had lines, product 'misses' in holiday season

Wed Jan 16, 2013 1:19pm EST
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* Stock dropped when retailer confirmed holiday sales slowdown

* Some investors skittish as competition heats up

* Shares drop 1.8 pct to $68.22 on Nasdaq

Jan 16 (Reuters) - Lululemon Athletica Inc attracted so many shoppers during the holiday season that some stores had trouble coping with the traffic, the yogawear retailer's chief executive said, while also conceding that some of the chain's new products fell flat.

CEO Christine Day, speaking at an investor conference on Wednesday, said some stores had lines of 50 to 70 people long, with customers waiting an hour just to buy a gift card.

On Monday, Lululemon caught the market off guard when it released new estimates for its fiscal fourth quarter, ending Feb. 3, that showed a sharp deceleration in same-store sales growth. Lulu trades at a premium, and the market has come to expect stellar sales growth every quarter.

"I think our product in the fourth quarter was some of the best we've ever had," said Day. "That said, as you kind of transition into a more technical space, particularly in Canada, coming from our grassroots of really yoga and a little bit more casual wear, for us there were some misses."

Day did not single out specific products. She said the company also needs to make sure it carries enough products at "gift-giving price points."

Lululemon has carved out a profitable niche selling fashionable, pricey workout gear to women. One of very few Canadian retailers to succeed in the United States, the chain is expanding in Europe and Asia over the next two years, and it has small but growing lines for men and girls.   Continued...