lululemon (LULU) Slammed After Q3 Results; Analysts & Investors Fear Rising Inventories and Lack of Margin Growth
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Price: $64.96 -1.8%
EPS Growth %: 0.0%
Financial Fact:
Other income (expense), net: 1.5M
Today's EPS Names:
MPAA, LTON, KFY, More
EPS Growth %: 0.0%
Financial Fact:
Other income (expense), net: 1.5M
Today's EPS Names:
MPAA, LTON, KFY, More
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lululemon athletica inc. (Nasdaq: LULU) announced financial results for the third quarter ended October 30, 2011 early Thursday. Shares of LULU are trading down over 14 percent following the release.
Net revenue increased 31 percent year over year to $230.2 million, but fell short of the Street's consensus of $235.74 million. Comparable stores sales increased by 16 percent on a constant dollar basis.
Gross profit rose 33 percent to $128.5 million, and as a percentage of net revenue gross profit increased to 55.8 percent for the quarter from 55.1 percent in the third quarter of fiscal 2010.
Income from operations grew 41 percent to $59.7 million, and as a percentage of net revenue was 25.9 percent compared to 24.1 percent of net revenue in the third quarter of fiscal 2010. Diluted earnings per share increased $0.08 per share year over year to $0.27 per share.
LULU ended the third quarter with $276.9 million in cash and cash equivalents compared to $224.8 million at the end of the third quarter of fiscal 2010. Inventory at the end of the third quarter of fiscal 2011 totaled $129.2 million compared to $73.0 million at the end of the third quarter of fiscal 2010.
Looking ahead to the fourth quarter, management expects net revenue to be in the range of $327 million to $332 million based on a comparable-store sales percentage increase in the low to mid-teens on a constant-dollar basis. Management's guidance is ahead of the consensus which is currently at $327.3 million. Diluted earnings per share are expected to be in the range of $0.40 to $0.42 for the quarter, inline with the Street's consensus of $0.42.
Christine Day, lululemon’s CEO stated: “We are proud to have produced another very healthy quarter of financial results. In the third quarter we achieved year over year revenue growth of 31%, EPS growth of 50% and comparable sales per square foot of $1,880. We are set to finish 2011 with a stronger brand, a stronger organization and we remain focused on our strategic growth opportunities.”
Following the release of its third quarter results, an analyst at KeyBanc is reaffirming its Underweight rating and $38 price target. The analyst notes that the 77 percent increase in inventory raises concerns about LULU's near-term margin dynamics.
The firm said the results reinforce: 1) slowing comps, particularly driven by weakness in Canada; and 2) limited margin upside due to peak sales productivity.
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Net revenue increased 31 percent year over year to $230.2 million, but fell short of the Street's consensus of $235.74 million. Comparable stores sales increased by 16 percent on a constant dollar basis.
Gross profit rose 33 percent to $128.5 million, and as a percentage of net revenue gross profit increased to 55.8 percent for the quarter from 55.1 percent in the third quarter of fiscal 2010.
Income from operations grew 41 percent to $59.7 million, and as a percentage of net revenue was 25.9 percent compared to 24.1 percent of net revenue in the third quarter of fiscal 2010. Diluted earnings per share increased $0.08 per share year over year to $0.27 per share.
LULU ended the third quarter with $276.9 million in cash and cash equivalents compared to $224.8 million at the end of the third quarter of fiscal 2010. Inventory at the end of the third quarter of fiscal 2011 totaled $129.2 million compared to $73.0 million at the end of the third quarter of fiscal 2010.
Looking ahead to the fourth quarter, management expects net revenue to be in the range of $327 million to $332 million based on a comparable-store sales percentage increase in the low to mid-teens on a constant-dollar basis. Management's guidance is ahead of the consensus which is currently at $327.3 million. Diluted earnings per share are expected to be in the range of $0.40 to $0.42 for the quarter, inline with the Street's consensus of $0.42.
Christine Day, lululemon’s CEO stated: “We are proud to have produced another very healthy quarter of financial results. In the third quarter we achieved year over year revenue growth of 31%, EPS growth of 50% and comparable sales per square foot of $1,880. We are set to finish 2011 with a stronger brand, a stronger organization and we remain focused on our strategic growth opportunities.”
Following the release of its third quarter results, an analyst at KeyBanc is reaffirming its Underweight rating and $38 price target. The analyst notes that the 77 percent increase in inventory raises concerns about LULU's near-term margin dynamics.
The firm said the results reinforce: 1) slowing comps, particularly driven by weakness in Canada; and 2) limited margin upside due to peak sales productivity.
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