Highlights From Lululemon Conference Call - Lululemon Athletica (NASDAQ:LULU)

Highlights from the Lululemon

LULU

conference call.

See significant potential to grow both domestically and internationally as we leverage this company's outstanding business model.
See clear evidence of demand both in Asia and Europe with several countries ready for stores.
Opportunities to build partnerships to increase speed-to-market and accelerate international expansion in regions are either:
- Too complex
- Don't have enough scale to have direct presence in.
Refocusing the organization on being design-led.
- By getting back to roots and inventing the future Lulu is fostering and promoting the healthy tension between technical innovations, styles, function and beauty.
Guests are responding well to seasonal product offerings and experiencing sell-through at a rate 4 times faster than anticipated,
Understand that our guests have choice and sustaining that loyal relationship is a priority.
Direct-to-consumer sales increased by 24.9% or $19.5 million.
- Offset by comparable store sales decline of 2% on a constant dollar basis.
Revenues from direct-to-consumer channel totaled $97.8 million or 18.8% of total revenue versus $78.3 million or 16.1% of total revenue in the fourth quarter of last year.
Although Lulu reported 120 basis points of leverage of SG&A expenses, this leverage resulted from the non-recurring impact of the incentive compensation true-up in the foreign exchange gain.
- As a result, operating income for the fourth quarter was $154.1 million or 29.6% of net revenue, compared with $152.6 million or 31.4% of net revenue in 2012.
E-commerce sales totaled $263.1 million or 16.5% of total sales.
Demand shifting from guests towards seasonal product which is becoming a larger proportion of our sales mix.
Actively pursuing opportunities to chase in fast-term products/
- Ability to buy deeper to rebalance assortment to this shift in gas demand is weighted towards the back half of the year.
Guidance:
First quarter of 2014, expects revenue to be in the range of $377 million to $382 million

Rebalancing of product assortment and to meet guest demands.
Continued investment in our supply chain and operating.
Product operations functions to create a product development engine for global business.
Expects overall operating margin to de-leverage in 2013 and our fiscal-year diluted earnings per share to be approximately $1.80 to $1.90. Q&A:
Short term, we're going to have to build our infrastructure internationally, which really hasn't been done both in Europe and in Asia.
The hiring and on-boarding of our general manager in Asia is a great example of hiring the guy that knows the market, that understands how to adopt Lululemon, what's very unique to Lululemon to a market, and ramp it up very quickly.

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