Market Overview

Lululemon Shares Tumble On Downbeat Forecast

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Shares of Lululemon Athletica Inc. (NASDAQ: LULU) tumbled over 5% in pre-market trading, despite the company reporting better-than-expected financial results for the fourth quarter. The company's weak forecast for the current quarter and full year exerted pressure on the shares.

For the first quarter, the company expects earnings of $0.31 to $0.33 per share, on revenue of $413 million to $418 million. Analysts had projected earnings of $0.39 per share on revenue of $442 million.

For the year, Lululemon projects earnings of $1.85 to $1.90 per share, on revenue of $1.97 billion to $2.02 billion. Analysts had estimated earnings of $2.06 per share on revenue of $2.05 billion for the year.

The Vancouver, Canada-based company posted a quarterly profit of $110.9 million, or $0.78 per share, versus a year-ago profit of $109.7 million, or $0.75 per share.

Its revenue climbed 16% to $602.5 million. However, analysts were expecting earnings of $73 per share on revenue of $602.41 million.

Its comparable-store sales, excluding currently fluctuations, rose 5%. Direct-to-consumer net revenue surged 20% on a constant dollar basis in the quarter.

Its gross margin shrank to 51.5% from 53.5%.

During the quarter, Lululemon repurchased 0.4 million shares of common stock at an average cost of $43.30 per share.

Lululemon ended fiscal 2014 with $664.5 million in cash and cash equivalents, versus $698.6 million at the end of fiscal 2013.

Inventory at the end of year was $208.1 million, versus $188.8 million at the end of fiscal 2013. Lululemon ended the quarter with 302 stores.

Laurent Potdevin, lululemon's CEO, stated: "Our solid performance in the fourth quarter builds on the momentum that began in the third quarter and reflects improved traffic and a strong guest response." Mr. Potdevin continued: "2014 was a critical year when we strengthened our leadership team and made important investments in our product pipeline, guest experience, brand, and community engagement. In 2015, we expect to substantially complete this foundational work and accelerate our investments in innovation to drive sustainable global growth as we continue to lead the market that we created."

Lululemon shares dipped 5.54% to $57.58 in pre-market trading.

Posted-In: profitEarnings News Guidance

 

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