News Column

Lululemon Issues Weak Outlook

September 12, 2013

The Associated Press

lululemon

NEW YORK (AP) Lululemon Athletica Inc. said Thursday that its profit slipped in its fiscal second quarter as a higher tax rate more than offset a jump in sales.

The results beat Wall Street predictions, but the Canadian yoga clothing maker issued a weak outlook for the current quarter and cut its predictions for the full year.

Its shares dropped $4.14, or 6 percent, to $64.88 in premarket trading about 30 minutes ahead of the market opening.

Vancouver-based Lululemon has struggled this year amid a recall of its Luon line of yoga pants over complaints that they were too sheer. And in June, the company said that its CEO would leave after a replacement was found.

For the quarter ended Aug. 4, Lululemon reported net income of $56.5 million, or 39 cents per share, down from $57.2 million, or 39 cents per share, in the same quarter the year before.

Revenue rose 22 percent to $344.5 million from $282.6 million.

Analysts, on average, expected a profit of 35 cents per share on $343.9 million in revenue, according to FactSet.

The revenue growth included an 8 percent increase in revenue at stores open at least a year. The metric is a key measure of a retailer's health, because it excludes revenue at stores that recently opened or closed.

The company's tax rate jumped to 30 percent from 19 percent a year ago. The year-ago rate included a positive adjustment of $7.2 million related to the reversal of previous taxes.

For the current quarter, Lululemon projected a profit of 39 cents to 41 cents per share on $370 million to $375 million in revenue. Analysts expect earnings of 45 cents per share on $390.1 million in revenue.

For the full year, the company said it now expects earnings of $1.94 to $1.97 per share on $1.63 billion to $1.64 billion in revenue. That's down from its June predictions of earnings between $1.96 and $2.01 per share and revenue of $1.65 billion to $1.66 billion.

Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Original headline: Lululemon 3Q profit falls, issues weak outlook


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Source: Copyright 2013 The Associated Press. All rights reserved.


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