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Lululemon Athletica (LULU)
Q3 2012 Earnings Call
December 06, 2012 9:00 am ET
Christine M. Day - Chief Executive Officer, President and Director
John E. Currie - Chief Financial Officer, Principal Accounting Officer, Executive Vice President and Treasurer
Sheree Waterson - Chief Product Officer
Erika K. Maschmeyer - Robert W. Baird & Co. Incorporated, Research Division
Adrienne Tennant - Janney Montgomery Scott LLC, Research Division
Omar Saad - ISI Group Inc., Research Division
Betty Y. Chen - Wedbush Securities Inc., Research Division
Dana Lauren Telsey - Telsey Advisory Group LLC
Roxanne Meyer - UBS Investment Bank, Research Division
Jim Duffy - Stifel, Nicolaus & Co., Inc., Research Division
Tal Woolley - RBC Capital Markets, LLC, Research Division
Lorraine Maikis Hutchinson - BofA Merrill Lynch, Research Division
Ben Shamsian - Sterne Agee & Leach Inc., Research Division
Lizabeth Dunn - Macquarie Research
Sharon Zackfia - William Blair & Company L.L.C., Research Division
John Zolidis - The Buckingham Research Group Incorporated
Edward J. Yruma - KeyBanc Capital Markets Inc., Research Division
Camilo R. Lyon - Canaccord Genuity, Research Division
Kimberly C. Greenberger - Morgan Stanley, Research Division
Christian Buss - Crédit Suisse AG, Research Division
John D. Kernan - Cowen and Company, LLC, Research Division
Andrew Burns - D.A. Davidson & Co., Research Division
Rob Wilson - Tiburon Research Group, Inc.
Previous Statements by LULU
» Lululemon Athletica Management Discusses Q2 2012 Results - Earnings Call Transcript
» Lululemon Athletica Management Discusses Q1 2012 Results - Earnings Call Transcript
» Lululemon Athletica's CEO Discusses Q4 2011 Results - Earnings Call Transcript
Hi. Good morning, everybody, and thanks for joining us on our third quarter 2012 conference call. A copy of today's press release is available in the Investor Relations section of our website and furnished on Form 8-K with the SEC and available on the commission's website at www.sec.gov.
Shortly after we end this morning, a recording of today's call will be available as a replay for 30 days, also on the website. And hosting our call today is Christine Day, the company's CEO; John Currie, the company's CFO; and Sheree Waterson our Chief Product Officer will also be available during the Q&A portion of the call.
We would like to remind everyone, of course, that statements contained on this call which are not historical facts may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results might differ materially from those projected in such statements due to a number of risks and uncertainties, all of which are described in the company's filings with the SEC.
[Operator Instructions] And with that, I will turn it over to Christine Day.
Christine M. Day
Thank you, Therese. Good morning, everyone, and thank you for joining us today to discuss our stellar third quarter results. I'm very proud of the team for achieving yet another strong quarter and coming in ahead of our expectations. Our robust financial results in the third quarter were largely driven by first-rate execution, beautiful product, community engagement and continued strength in our e-Commerce business.
During the course of the quarter, we celebrated the opening of an ivivva store, 3 stores in Australia and North American store openings in Omaha, Pittsburgh, New York, Memphis, Baltimore, Columbus, Franklin and Bridgewater, New Jersey. I am continually amazed with the creativity of our teams in enrolling their communities to the store opening events, which this quarter included the Gospel of Sweat at New York City's historic Upper West Side Riverside Church. Both the name of the event and the location were intentionally created to engage a conversation about spirituality and the mindfulness in New York City yoga studios, spin studios, fitness studios and the laps run around the reservoir. 200 yogis practicing mandala style mat-to-mat on the rooftop of the iconic Peabody Hotel in Memphis to celebrate the opening of that region's third store.
For the opening of our second store in Columbus, both stores came together for a huge community class, Om-H-I-O, where 500 yogis practiced yoga inside the Ohio State University Oval together. When we entered the Columbus market as a showroom 3 years ago, there was only 1 yoga studio, and today, there are 15 studios. This speaks volumes to the work both teams have done in their communities to cultivate yoga and be the resource for all things yoga related. It is this authentic connection with our guests and our community that differentiates us from many other retailers.
e-Commerce continued to be a significant growth driver for the business in the third quarter, with year-over-year increases up 89% in sales, the highest rate of growth in the active wear or vertical retail apparel categories.
In addition to our investments in bolstering our social, e-mail and blog activities to support our e-Commerce business, we are also laying the groundwork for future growth. We recently launched our Hong Kong, Singapore, U.K. and EU specific websites, which gives us access to 24 markets with local fulfillment, more localized content and the ability to connect more authentically with those communities. We established third-party logistics and distribution centers in Hong Kong and Rotterdam to better serve the Asian, European and U.K. markets.
We have said previously that we have been spending the past several months doing a lot behind the scenes work, and our international expansion is now entering a phase of more on-the-ground development. Based on the success of both Hong Kong showrooms, we are actively looking to secure real estate for a store in that market. In London, we will leverage the website and current infrastructure with the Chelsea showroom, with an additional showroom penetration in 2013. Overall, we intend to go deeper in showrooms in Europe and Asia over the next 24 months, and we will begin pre-seeding activities in up to 15 countries over the next 2 years.