lululemon athletica inc. (LULU)
Q4 2009 Earnings Call
March 25, 2010 9:00 am ET
Jean Fontana – ICR
Christine Day – President & CEO
Chip Wilson - Chairman
John Currie – CFO
Sheree Waterson – EVP General Merchandise Manager
Lorraine Hutchinson – Banc of America
Michelle Tan - Goldman Sachs
Janet Kloppenburg – JJK Research
Liz Dunn - Thomas Weisel
Paul Lejuez - Credit Suisse
Chi Lee – Morgan Stanley
Sharon Zackfia – William Blair
Jennifer Black – Jennifer Black & Associates
Edward Yruma – KeyBanc
Rob Simone – Cowen and Company
[Christine Cober] – JPMorgan
Dana Telsey – Telsey Advisory Group
Howard Tubin - RBC Capital Markets
Claire Gallacher – Capstone Investments
Previous Statements by LULU
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Good morning. Thank you for joining lululemon athletica’s conference call to discuss fourth quarter and full year fiscal 2009 results. A copy of today’s press release is available on the Investor Relations section of the company’s website at www.lululemon.com or alternatively as furnished on Form 8-K with the SEC and available on the Commission’s website at www.sec.gov. Today’s call is being recorded and will be available for replay for 30 days shortly after the call on the Investor Relations section of the company’s website.
Hosting today’s call is Christine Day, the company’s President and Chief Executive Officer and John Currie, the company’s Chief Financial Officer.
Before we get started, I would like to remind you of the company’s Safe Harbor language. The statements contained in this conference 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 future 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.
Now I would like to turn the call over to Christine Day, lululemon athletica’s Chief Executive Officer.
Thank you Jean, good morning everyone and thank you for joining us to discuss our fourth quarter results. With me today are Chip Wilson, our Chairman, John Currie, our CFO, and Sheree Waterson, our EVP General Merchandise Manager. Following my opening remarks I’ll turn the call over to John who will go through the financial details of the quarter.
We are very pleased with our fourth quarter results and a strong finish to fiscal year 2009 as well as the momentum in the business as we start 2010. Our constant dollar comparable store sales swung from down 8% in the first quarter of 2009 to up to 29% in the fourth quarter and earnings per share did a similar turnaround with a 25% drop in Q1 and 150% increase in Q4 compared to the same quarter in 2008.
We deployed several strategies during the year that drove the rebound in our business. We reacted quickly to the macro environment at the end of 2008 which put us solidly in the position to focus on the opportunities in 2009.
We have already discussed our decision to add more value to our products such as our technical functionality and other key features as well as new fabrics in order to offer additional value to our guests without increasing prices.
This along with the great success of our running line helped to turn our sales momentum positive and an improving economy shifted the headwinds to tailwinds and added strength in the back half of the year. We also turned up our community-oriented efforts such as supporting marathons and launching and Ambassador program for our running line in every store to match our yoga program.
There were other drivers as well including the launch of our e-commerce site in April which added incremental revenue and even more importantly created heightened brand awareness. We were also able to leverage our systems that were implemented to improve our supply chain capacity and inventory control.
And finally our team throughout the organization really came together and stepped up to capitalize on our opportunities. And now as we move into 2010 our e-commerce site, exposure from the Olympics, community and our showroom expansion strategies are all coming together to give our brand awareness around North America another meaningful incremental boost.
This not only drives our comparable store sales but will also benefit our new store productivity going forward. Our Canadian growth continues to deliver strong sales and our US business has reached the point where we are seeing a strong lift across all markets and age classes, as well as strong openings in the 2009 class stores.
Our Q1 comparable store sales are now running above the 20% comp range in both the US and Canada with our class of 2008 which opened in a soft economy leading the way. The growth trajectory of our US stores is now well on track to achieve our long-term objective of being in line with the company average productivity.
Obviously we are very pleased with the management team we have in place at the store and district manager level and here at the support center giving us the capacity to expand as well as to flow through incremental sales to the bottom line.
Looking ahead into 2010 we plan on capitalizing on our unique showroom strategy. We have opened one so far in 2010 and will have 25 more opening before the end of June. These showrooms are located in our top potential markets and trade areas from our 300 target store list and include cities such as Malibu, California, Boca Raton, Florida, and Fort Worth, Texas.