By RTT News, March 21, 2013, 09:13:00 AM EDT
(RTTNews.com) - Canadian yoga-inspired athletic apparel company lululemon athletica, Inc. (LULU, LLL.TO) Thursday reported a higher fourth-quarter profit, as revenues climbed 31 percent, with 10 percent growth in comparable stores sales. Both earnings per share and revenues beat analysts' expectations.
The company, however, forecast earnings for the first quarter and fiscal year below analysts' view. The guidance reflected negative impact from the black Luon issue.
On March 18, the company announced a recall of its signature black Luon fabric yoga pants and crops from stores, showrooms and online website. At that time, Lululemon had lowered its revenue and comparable-store sales guidance for the first quarter after the recall that stemmed from the detection of fabric quality issues.
Christine Day, CEO of the company stated, "Our proprietary fabric, black Luon, is a very technical and sensitive product to manufacture. We have a long history with our manufacturers and as we have in the past, we are working closely with them to resolve the current issues."
In the fourth quarter, net income attributable to the Vancouver, Canada-based company increased to $109.38 million or $0.75 per share, from $73.52 million or $0.51 per share in the year ago quarter.
On average, 23 analysts polled by Thomson Reuters expected the company to earn $0.74 per share for the quarter. Analysts' estimates typically exclude special items.
Net revenues for the quarter climbed 31 percent to $485.49 million, which also exceeded analysts' estimate of $482.10 million. Comparable stores sales increased 10 percent on a constant dollar basis.
The company said its recent quarter consisted of 14 weeks, while the prior-year quarter consisted of 13 weeks. Net sales for the quarter included an additional week; however comparable stores sales calculations excluded the 14th week.
Direct to consumer revenue rose 56 percent from the preceding year.
At the end of the quarter, the company had 211 stores in North America and Australia.
For the 53 weeks ended February 3, net income attributable to the company was $270.56 million or $1.85 per share, up from $184.06 million or $1.27 per share in the 52 weeks ended January 29, 2012. Annual revenues increased 37 percent to $1.37 billion.
Looking ahead to the first quarter, the company expects earnings per share to be in the range of $0.28 to $0.30. Net revenues are still expected to be between $333 million and $343 million, based on a comparable-store sales percentage increase of 5 to 8 percent on a constant-dollar basis.
Analysts expect the company to report earnings of $0.40 per share, on revenues of $344.99 million for the first-quarter.
Lululemon noted that outlook for the first quarter reflects its current expectations of impact from the black Luon issue, including lost revenue in the range of $12 million to $17 million, additional costs expected to be incurred and the write down of affected product on hand and expected to be received during the first half of 2013. The resulting negative impact on earnings per share will be $0.11 to $0.12.
For the fiscal ending January 2014, the company anticipates earnings per share of $1.95 to $1.99, and net revenue to be in the range of $1.615 billion to $1.640 billion. Analysts are looking for earnings of $2.17 per share, on revenues of $1.67 billion for the fiscal.
LULU closed Wednesday's regular trading at $63.88 on the Nasdaq. In the pre-market activity, the shares are up 1.25 percent. LLL.TO closed on the Toronto Stock Exchange at C$65.37, down 0.56 percent.
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