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Mar 30, 2017
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Lululemon earnings miss in fourth quarter, 2016 sales lift

By
Reuters
Published
Mar 30, 2017

Canada's Lululemon Athletica Inc on Wednesday reported fourth-quarter earnings per share that fell shy of analysts' expectations, hurt by a stronger-than-expected Canadian dollar.


The company said it expects first-quarter revenue between $510 million to $515 million, based on an expected decrease in sales in the low single digits - Reuters


For the fourth quarter ended Jan. 29, net income rose to $136.1 million, or 99 cents per share, from $117.4 million, or 85 cents per share, in the prior year. Revenue was $789.9 million, up from $704.3 million.

Analysts, on average, had expected earnings of $1.01 a share on revenue of $783.56 million, according to Thomson Reuters I/B/E/S.

Lululemon said the negative foreign currency impact was 2 cents higher than previously estimated.

Fourth-quarter sales online and at stores open at least a year rose 7 percent, on a constant dollar basis. That beat the 5.3 percent increase expected by analysts, according to Consensus Metrix.

For the full-year 2016, net revenue increased 14% to $2.3 billion from $2.1 billion in fiscal 2015. Total comparable sales increased 6%, or by 7% on a constant dollar basis, while comparable store sales increased 4%, or by 5% on a constant dollar basis. 

"2016 marks a milestone year where our successful execution against long-term strategies returned the company to positive operating income growth for the first time in three years," ​said Laurent Potdevin, CEO, Lululemon in a statement.

"Although we’ve had a slow start to 2017, our teams are passionately committed to delivering on our robust plans across product innovation, digital, North America and international as we realize our ambitious vision for the future."

Over a conference call, Lululemon said it expected first-quarter 2017 comparable sales to fall. A disappointing product assortment in the first quarter resulted in weaker online sales and fewer shoppers in stores.

"We've clearly identified the issues: an assortment lacking depth and color for spring," said Potdevin.

"Our teams have been course-correcting issues, with early indications reflecting positive impact on performance. We will see more color in selected styles as early as next week."

Potdevin said its Chinese expansion would be a key focus this year, while Lululemon's men's line is on track to become a $1 billion-plus business by 2020.

Looking forward, the company said it expects first-quarter revenue between $510 million to $515 million, based on an expected decrease in sales in the low single digits. Earnings of 25 to 27 cents per share is forecast for the quarter.

Executives remained bullish on full-year results, despite the slow start in the first quarter. Its full-year revenue forecast ranges between $2.55 billion and $2.6 billion and full-year earnings range between $2.26 and $2.36 per share.

The outlook and results sent shares of the Canadian yoga and leisure apparel retailer falling 18.2 percent to $54.25 after markets closed.

Reuters with Benjamin Fitzgerald

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