CALGARY, Alberta (Reuters) - Lululemon Athletica LLL.TO (LULU.O) said on Monday its first-quarter profit more than doubled as it sold more yoga-inspired sportswear, but it lowered its profit forecast slightly for the rest of the year, which sent its shares plunging.
The company, which includes such maxims as “Dance, sing, floss, travel” and “Do one thing in life that scares you,” as part of its corporate manifesto, said it cut its profit outlook for the year to between 68 cents and 71 cents a share, down from its earlier forecast of 70 to 72 cents.
It cited the cost of hiring staff and strategic plans to expand its business as the reason for the guidance change, but was left defending the decision to analysts and investors as its shares sagged in after hours trading on Nasdaq.
“We certainly understand the importance of earnings guidance, especially a revision, and we do think revising as we have is prudent,” John Currie, the company’s chief financial officer, said on a conference call. “We feel this is conservative and prudent.”
After closing up 23 cents at $32.22 on Nasdaq, Lululemon stock fell almost 11 percent to $28.81 in after-hours trading, following its earnings release after markets closed.
In Toronto the shares ended up 56 Canadian cents at C$32.64.
Lululemon plans to add 35 stores a year for the next three to five years, with seven new locations already opened since the start of the fiscal year. It had 85 stores in Canada and the United States in the quarter. A year earlier it had 54.
Lululemon said its profit for the 13-week period, ended May 4, rose to $8.48 million, or 12 cents a share, from $3.54 million, or 5 cents a share, in the first quarter last year.
Income from operations rose 72 percent to $11.7 million from $6.8 million, while revenue climbed 75 percent to $78.2 million.
Analysts, on average, had expected earnings per share before exceptional items of 12 cents, on revenue of $72.1 million.
The Vancouver-based company made headlines last year when it was ordered by a Canadian government agency to remove tags that touted therapeutic benefits from fabric containing seaweed after a New York Times report pointed to lab tests that disputed the claims.
Same-store sales rose 28 percent. Adjusted to exclude the impact of a robust Canadian dollar, they gained 15 percent.
However it raised its annual revenue forecast to between $380 million and $385 million, from a range of $370 million to $375 million, due to strong sales at new stores.
Lululemon stock, which went public last year amid much fanfare, is down about 45 percent from the high of C$58.77 reached last October. A sluggish U.S. economy and a steep spike in the price of oil have raised worries over the outlook for consumer spending, particularly among high-end retailers.
Reporting by Scott Haggett; editing by Rob Wilson