No sweat: Lululemon sales hit $1 billion

TORONTO – Lululemon Athletica Inc. beat analysts’ fourth-quarter expectations Thursday as the sportswear retail sensation’s chief executive looks to build the business through new product categories and further international expansion in 2012.

“I feel that we are better poised to execute than we ever have before,” Christine Day told analysts on a conference call, saying the company had put its low-inventory problems behind it after demand for goods outstripped supply at the company’s stores last year.

The Vancouver-based athletic-wear retailer hit $1 billion U.S. in annual sales for the first time in 2011 and posted estimate-beating results for the fourth quarter. Sales in the final three months ended Jan. 29 were $371.5 million U.S., ahead of an expected $361.84 million U.S. and up 51.4 per cent from the same period last year.

But in an updated outlook Thursday, Lululemon said it expected full-year earnings per share for the current fiscal year to be in the range of $1.50 to $1.57, lower than a previous estimate of $1.61 a share. It forecast net revenues for the year to be between $1.3 billion and $1.325 billion U.S. In a previous outlook the company had projected sales of $1.3 billion U.S. for the year.

Shares closed with a gain of $2.44, or 3.32 per cent, to $75.95 on the Toronto Stock Exchange.

For the last quarter of fiscal 2011, earnings per share were 51 cents U.S., ahead of analysts’ consensus forecast of 49 cents U.S. Same-store sales, a key retail industry bellwether measuring volume at stores open for more than a year, soared 26 per cent compared with the same period last year. Full year results also came in ahead of estimates, with sales of $1 billion U.S. beating an expected $990.85 million U.S. and earnings per share of $1.27 U.S., besting a predicted $1.24 U.S.

Day said the company is aiming to boost e-commerce to 15 per cent of overall sales, up from 13.5 per cent in the fourth quarter. The website has been a boon for the company. “In the fourth quarter alone we did $50 million U.S. in e-commerce sales, compared with $57 million U.S. for the full year of fiscal 2010.”

Day said the company had plans to introduce additional cycling and spinning gear this year as well as broadening its “silverescent” line, odour-inhibiting athletic products that are threaded with silver to deter the spread of odour-producing bacteria and fungi in human sweat, into accessories. Men in particular “really appreciate the anti-stink technology,” Day said, compared with conventional technical athletic apparel made from polyester.

Lululemon will open a showroom in London in midApril and a second showroom in Hong Kong at the end of May. “There is huge demand coming from all over Southeast Asia” for the goods and many customers are coming into the Hong Kong store and buying in bulk, Day said. The company also plans to open discrete websites for Australia, the U.K. and Asia this year.