UPDATE: Lululemon Posts Upbeat Q3 Earnings, But Issues Weak Outlook

Lululemon Athletica

reported better-than-expected fiscal third-quarter earnings. However, the company issued a weak forecast. The Vancouver, Canada-based company posted a quarterly profit of $60.5 million, or $0.42 per share, versus a year-ago profit of $66.1 million, or $0.45 per share. Its revenue climbed 10% to $419.4 million from $379.9 million. However, analysts were projecting earnings of $0.38 per share on sales of $424.7 million. Total comparable sales, including comparable store sales and direct to consumer, gained 3% for the quarter on a constant dollar basis. Comparable store sales slipped 3% on a constant dollar basis, while direct to consumer revenue jumped 27% on a constant dollar basis. Gross profit gained 3% to $211.1 million, while income from operations slipped 12% to $81.2 million. During the quarter, Lululemon repurchased 1.8 million shares at an average cost of $40.49 per share. Lululemon ended the quarter with $633.6 million in cash and cash equivalents, versus $600.7 million at the end of the year-ago quarter. Inventory at the end of the quarter totaled $229.9 million, versus $209.1 million at the end of the year-ago quarter. Lululemon ended the third quarter with 289 stores. Laurent Potdevin, lululemon's CEO, stated: "I am pleased that our third quarter results demonstrated sequential improvements as the quarter progressed, with all key facets of our business - brand, guest experience, and product - contributing to our momentum." For the fourth quarter, Lululemon projects earnings of $0.65 to $0.69 per share on revenue of $570 million to $585 million. Analysts expected earnings of $0.72 per share on sales of $594.8 million. For the full fiscal 2014, Lululemon now projects earnings of $1.53 to $1.57 per share on net revenue of $1.765 billion to $1.780 billion. Analysts expected earnings of $1.77 per share. Lululemon shares fell 2.03% to $45.75 in pre-market trading.