Lululemon Athletica Q3 Profit Declines, Yet Tops Estimates; Lifts FY EPS View

(RTTNews) - Canadian yoga-wear maker Lululemon Athletica, Inc. (LULU) Thursday reported a decline in the third-quarter profit, reflecting higher expenses, despite 10 percent growth in revenues. Earnings per share topped analysts' estimates, while revenues missed view. For fiscal year, the company raised its earnings per share outlook, while lowered revenue view.

The firm forecast fourth-quarter earnings and revenues below Street expectations.

For the 13 weeks ended November 2, the company's net income declined to $60.45 million or $0.42 per share from $66.11 million or $0.45 per share in the previous year.

On average, 33 analysts polled by Thomson Reuters expected the company to report profit per share of $0.38 for the quarter. Analysts' estimates typically exclude special items.

The Vancouver, Canada-based company's net revenue for the quarter climbed 10 percent to $419.4 million from $379.9 million in the year-ago quarter. Analysts estimated revenue of $424.77 million for the period.

Including comparable-store sales and direct to consumer, total comparable sales rose 3 percent on a constant dollar basis. Quarterly comparable-store sales slid 3 percent on a constant dollar basis, while direct to consumer revenue climbed 27 percent on a constant dollar basis.

Selling, general and administrative expenses advanced to $129.93 million from $112.27 million a year ago.

Looking ahead, for the fourth quarter, the company expects earnings per share to be in the range of $0.65 to $0.69.

Net revenues for the quarter are anticipated to be $570 million to $585 million based on a total comparable sales increase in the low single digits on a constant dollar basis.

Analysts are looking for earnings of $0.72 per share, on revenues of $593.54 million for the quarter.

The sales forecast relative to the prior guidance is expected to be impacted by around $15 million owing to the combined impact of West Coast port delays, a lower Canadian dollar, and delayed store openings.

For fiscal 2014, the firm now sees earnings per share to be in the range of $1.53 to $1.57, or $1.74 to $1.78 normalized.

This compares to the earlier estimate of earnings per share in the range of $1.51 to $1.56 or normalized earnings per share of $1.72 to $1.77.

Lululemon sees fiscal year net revenues to be between $1.765 billion and $1.780 billion, based on a total comparable sales increase in the low single digits on a constant dollar basis. Analysts project annual earnings per share of $1.77, on $1.79 billion in revenues.

The firm's previous outlook was for revenues of $1.78 billion to $1.80 billion.

LULU closed Wednesday's trading at $46.70, down 2.16 percent. In the pre-market activity on Thursday, the shares are up 2.83 percent.