Lululemon Quarterly Earnings: A Mixed Bag


Investors pushed shares of Luluemon lower in early trading on Thursday, after the yoga-apparel retailer posted mixed results for its third quarter of fiscal 2013.

Lululemon reported a quarterly profit of $0.45 per share on net income of $66.1 million, which beat analysts' estimates for earnings per share of $0.41 in the period. Revenue increased 20% to $379.9 million, which was also slightly ahead of Wall Street's expectations for revenue of $376.1 million. However, much of the good news was offset by weak guidance for the retailer's fourth quarter and full-year fiscal 2013 results.

Lululemon said flat same-store sales could weigh down earnings for the current quarter. As a result, the company forecasts fourth-quarter net revenue in the range of $535 million to $540 million, and a profit between $0.78 and $0.80 per share for the period. This is particularly concerning because the fourth quarter includes sales figures from the all-important holiday shopping season. Lululemon's brand is still recovering from a string of quality control issues and a product recall that cost the company as much as $67 million in revenue this year. Therefore, weaker-than-expected sales during the holidays could push the stock even lower heading into the new year.

Moreover, Lululemon also lowered its full-year outlook. For fiscal 2013, the retailer now expects revenue in the range of $1.605 billion to $1.610 billion, which is down from its prior guidance for full-year revenue between $1.625 billion and $1.635 billion. If there's one thing investors can be optimistic about it is the fact that Lululemon finally found a successor to Christine Day. Beginning in January, Laurent Potdevin will take over for Day as Lululemon's CEO.

Shares of Lululemon are down more than 10% year-to-date, with the stock currently trading around $61 per share, down from $68.35 at yesterday's close.


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