June 12, 2010 / 6:51 PM / 7 years ago

CORRECTED - UPDATE 3-Lululemon beats profit estimates, lifts forecast

(Refiles to correct first name of CFO to John from Peter. In U.S. dollars unless noted)

* EPS $0.27 vs analysts’ estimate $0.21

* Sees Q2 EPS of $0.21 to $0.23

* Lifts 2010 EPS view to $1.05-$1.10, rev $620-$635 mln

* Stock climbs 5.2 pct to $41.15 on Nasdaq

* Retailer Dollarama says profit more than doubles

By Susan Taylor

OTTAWA, June 10 (Reuters) - Lululemon Athletica Inc LLL.TO (LULU.O) said on Thursday its quarterly profit more than tripled, besting analysts’ forecasts on a sharp increase in demand for its yoga and running wear.

Shares of the specialty clothing retailer, which raised its 2010 revenue and profit forecasts, rose more than 5 percent in morning trade.

Lifted by sturdy growth in both Canada and the United States, Vancouver-based Lululemon said sales at stores open for at least one year rose 51 percent. On a constant dollar basis, that key retail growth measurement rose 35 percent.

The clothier forecast revenue for its 2010 financial year of $620 million to $635 million and earnings per share of $1.05 to $1.10. Those numbers are up from the company’s previous forecast for revenue of $570 million to $585 million and earnings per share of $1.00 to $1.05.

“With consensus for 2011 (EPS) at $1.39, we would not be surprised to see those numbers move higher based on the 2010 guidance,” said RBC Capital Markets analyst Tal Woolley.

“The rising Canadian dollar has a beneficial impact on guidance, but we believe the strong merchandising performance is the primary driver of the guidance.”

New lines of running clothes with protection from skin-damaging ultraviolet rays from the sun were a runaway hit, the company said. Lululemon plans to introduce reflective running fabric in the third quarter.

The company said it earned $19.6 million, or 27 cents a share, in its financial first quarter ended May 2, up from $6.5 million, or 9 cents a share, a year earlier.

Revenue rose 69.3 percent to $138.3 million.

Analysts had expected a profit of 21 cents a share, on average, and revenue of $128 million, according to Thomson Reuters I/B/E/S.

Gross profit rose by 112 percent to $74 million. The profit margin increased to 53.8 percent from 42.9 percent in the same period last year.

The company forecast second-quarter revenue of $140 million to $145 million and earnings per share ranging from 21 to 23 cents. Analysts have forecast earnings per share of 21 cents on revenue of $132 million.

Lululemon said its second-quarter gross margin is expected to surpass year-earlier numbers due to strong sales and a favorable currency impact.

But the figure will likely lag first-quarter margins as the company sells lower-margin autumn products, spends to expand the business, and marks down more prices due to increased inventory.

Lululemon, whose growth has been crimped in the past by inadequate inventory, said the value of its inventory rose to $50.75 million in the first quarter from $44.6 million last year.

“This inventory level is more in line with our expected sales productivity and should support our planned growth in the second quarter,” Chief Financial Officer John Currie told a conference call with analysts.

Lululemon said it expects a new distribution center in Sumner, Washington, to begin deliveries to U.S. stores next week, increasing efficiency.

The company expects to open 12 to 15 new stores in North America and three in Australia during the year.

Shares of Lululemon rose $2.05 to $41.15 on Nasdaq and C$1.67 to C$42.65 on the Toronto Stock Exchange on Thursday morning.

DOLLARAMA PROFIT RISES

Dollarama Inc (DOL.TO), Canada’s largest operator of dollar stores, also recorded big quarterly gains on Thursday as profit more than doubled.

Its earnings rose to C$22.5 million ($21.6 million), or 30 Canadian cents a share, from C$11.1 million, or 26 Canadian cents a share, in the same period last year.

Revenue rose 14 percent to C$311.9 million.

Dollarama shares rose 11 Canadian cents to C$25.36 on the TSX. ($1=$1.04 Canadian) (Additional reporting by Euan Rocha; Editing by Peter Galloway)

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