* Empire EPS C$1.00 vs C$0.89
* Empire shares rise 0.5 pct
* Lululemon EPS $0.13 vs $0.11
* Lululemon shares drop 23 pct
TORONTO, Dec 11 (Reuters) - Canadian retailers Lululemon Athletica Inc LLL.TO and Empire Co (EMPa.TO) both showed double-digit profit growth in their latest quarterly results on Thursday, but while the stock market warmed to Empire it was definitely cool on Lululemon.
In tough economic times, the difference comes down to what they sell, analysts said. Empire sells food. Lululemon sells trendy clothes.
Empire, owner of Sobeys, Canada’s No. 2 supermarket chain, earned C$65.7 million ($53.41 million), or C$1.00 a share, in its second quarter, up 12.5 percent from C$58.4 million, or 89 Canadian cents a share, in the same period last year.
Empire’s shares rose 0.5 percent to C$47.25.
Meanwhile, Lululemon (LULU.O) shares tumbled more than 23 percent after it posted solid third-quarter results but warned that full-year sales and profit would be weaker that it previously forecast.
Blaming a declining Canadian dollar and ailing retail sector, Lululemon cut its 2008 earnings forecast to a range of 55 cents to 57 cents a share from a previous forecast of 68 cents to 71 cents.
It reduced its revenue forecast to $340 million to $345 million from $380 million to $385 million. It still expects to open 35 new stores selling its yoga-inspired workout wear in North America in the year.
For the third quarter, Lululemon’s profit rose 16 percent to $8.8 million, or 13 cents a share, from $7.6 million, or 11 cents a share, for the same period last year.
Analysts say that as the economic downturn takes hold consumers have showed resistance to opening their purse strings for nonessential items.
“Obviously when you are in an economic downturn, the attitude toward spending changes. People tend to shun the more extravagant items and go more to the thing you need instead of the things you want,” said Ian Nakamoto, director of research at MacDougall, MacDougall and MacTier.
“This is not going to be a short-term attitude change here.”
Grocery stores in general have proved more resilient during tough economic times than vendors of discretionary items. The Toronto Stock Exchange’s consumer staples group .GSPTTCS has fallen 5.6 percent this quarter, but its consumer discretionary counterpart .GSPTTCD has dropped 23.7 percent.
“This is the nature of the beast,” said Brian Yarbrough, an analyst at Edward Jones, in St. Louis, Missouri. “When people are cutting back, they are not going to cut back on food and basic things that they have got to have, but they are going to cut back on going to restaurants and buying more apparel.”
“It’s all just a function of the weaker environment. We see this all the time and unfortunately it is really starting to weigh on some of these discretionary stocks.”
$1=$1.23 Canadian Additional reporting by Susan Taylor in Ottawa Reporting by Scott Anderson; editing by Peter Galloway