Lululemon Athletica Conference Call Highlights

Lululemon Athletica

reported its third quarter earnings on Thursday. Shares of the company are up ten percent. Below are some key highlights from its conference call: • With a total combined comparable sales growth of 3% that showed improvement over our second quarter, marking a key inflection point with our women's business returning to positive territory. • As expected, we delivered a better product assortment, which was a key driver of improved performance this fall, compounded with more cohesive brand and product communication in-store. • We were pleased to see sequential improvements in each month of the quarter as it progressed driven by our product flows and new allocation. • Overall, I attribute the success of the third quarter to the ongoing foundational work that we've described in the past: building our talent pool, improving our processes, and integrating brand and product. • We have turned an important corner, and we'll continue to be relentless about keeping this flywheel turning and accelerating. • In the men's category, we expanded both in-store and online assortment, expanding our breadth of style, resulting in a strong performance with an 11% comp this past quarter. • For our younger guests, ivivva broadened its outerwear selection and created excitement with the launch of additional trends and texture in seamless assortment, delivering a positive comp of 37%. • We are on track to open 10 ivivva stores by the end of 2014. • This past quarter alone we launched our first mobile shopping app, which was downloaded 274,000 times and represents approximately 8% of online sales. • Additionally, we launched a redesign of the my account feature on our website, resulting in a 27% increase in new accounts being captured this past quarter alone. • Our Singapore store is set to open in a few hours, and we had almost 3,000 people join us at the recent Singapore Yoga Beat event on Orchard Road and we are excited to further connect with our guests in Singapore. • Our gift presents video generated about 1.2 million views within the first week of launch and has now reached 3.5 million views. Financial Highlights: • Our Q3 total net revenue rose 10.4% to $419.4 million from $379.9 million in the third quarter of 2013. • The increase in revenue was driven by total comparable store sales growth on a combined basis including e-commerce of 3%. • Comprised of 27% growth online and a bricks-and-mortar store sales decline of 3%, all on a constant dollar basis. • The addition of 42 net new corporate-owned stores since Q3 of 2013, 27 net new stores in the United States, two stores in Canada, two stores in New Zealand, one in the UK, and 10 ivivva stores; • Which had the effect of decreasing reported revenues by $7.5 million or 1.8%. • This was more than we had anticipated as these currencies weakened late in the quarter. • This impacted our third quarter relative to our expectations and our outlook for the balance of the year. • During the quarter, we opened 19 net new corporate-owned stores, 15 in the U.S., one in Canada, and three ivivva. • We ended the quarter with 289 total stores versus 247 a year ago. There are now 222 stores in our comp base, 37 of those in Canada, 151 in the United States, 25 in Australia and New Zealand, and 9 ivivva. • A lower tax rate was a result of truing up our tax expense based on finalized prior-year tax filings. • Absent this true-up, our tax rate would have been 30.3%. Net income for the quarter was $60.5 million or $0.42 per diluted share. • Compared to net income of $66.1 million or $0.45 per diluted share for the third quarter of 2013.