Lululemon Results Top Estimates, But Sees Weak Q4; Cuts FY13 View Yet Again

(RTTNews) - Canadian yogawear maker Lululemon Athletica, Inc. (LULU) Thursday reported a higher third-quarter profit, as net revenues climbed 20 percent from last year. Earnings per share, as well as revenues beat analysts' expectations.

The company, however, forecast fourth-quarter earnings and revenues below Wall Street estimates, and cut the upper end of its earnings outlook for fiscal 2013, and lowered revenue view. While reporting its second-quarter results, Lululemon had trimmed its full-year 2013 outlook. The shares are currently down about 9 percent in pre-market trading.

Christine Day, CEO of the company stated, "This so far has been a year of challenges, learning, and growth for lululemon, and while our outlook for the fourth quarter is being impacted by both macro and execution issues, I believe that the investments we are making in the business combined with the team in place create a strong platform for growth in the years ahead."

For the third quarter ended November 3, 2013, net income attributable to the Vancouver, Canada-based company was $66.11 million or $0.45 per share, higher than $57.32 million or $0.39 per share in the previous year.

On average, 32 analysts polled by Thomson Reuters expected earnings per share of $0.41 for the quarter. Analysts' estimates typically exclude one-time items.

Net revenues for the quarter climbed 20 percent to $379.90 million from $316.54 million in the year-ago quarter, and topped 28 analysts' consensus revenue estimate of $376.20 million.

Thirteen-week comparable-stores sales increased 2 percent in the recent quarter, compared to an 18 percent growth a year earlier. Comparable-stores sales were up 5 percent on a constant dollar basis.

Direct to consumer revenues were up 37 percent in the period and reached $62 million. This represented 16.3 percent of total company revenues, an increase from 14.3 percent in the same quarter in fiscal 2012.

Inventory at the end of the recent third quarter totaled $206.2 million, compared to $164.7 million a year earlier.

Looking ahead to the fourth quarter, the company expects earnings per share to be in the range of $0.78 to $0.80. Net revenues are expected to be in the range of $535 million to $540 million based on flat comparable-store sales on a constant-dollar basis.

Analysts expect the company to report earnings of $0.84 per share, on revenues of $571.76 million for the quarter.

For fiscal 2013, the firm now sees earnings per share of $1.94 to $1.96, and net revenue in the range of $1.605 billion to $1.610 billion. Earlier, the company forecast earnings in the range of $1.94 to $1.97 per share, on projected annual revenues of between $1.625 billion and $1.635 billion.

Analysts project annual earnings of $1.96 per share, on revenues of $1.64 billion for the year.

At the end of the quarter, the company had 247 stores in North America and Australia, with 22 stores opened in the recent quarter.

LULU closed Wednesday's regular trading session at $68.35, down $1.11 percent. In the pre-market activity, the shares are down 8.90 percent.