BUSINESS

Lululemon Sees Rising Revenue, Says It's Putting 'Sheer Pants' Fiasco Behind It

03/26/2015 07:37 EDT | Updated 05/26/2015 05:59 EDT
Bloomberg via Getty Images
Groove pants sit on display at the Union Square Lululemon retail store in New York, U.S., on Wednesday, Sept. 15, 2010. Lululemon Athletica Inc., the Canadian yoga-wear retailer, plans to open about 225 new stores in the U.S. after tripling its cash from operations to $118 million, said Chief Financial Officer John Currie. Photographer: Benjamin Norman/Bloomberg via Getty Images

VANCOUVER -- Lululemon Athletica Inc. says it has had good customer response to changes that the yoga-inspired fashion retailer put into place since a high-profile gaffe over black pants that could sometimes expose too much.

Revenue for the quarter ended Feb. 1 surged by 16 per cent from a year earlier and its profit came in above analyst estimates, building on momentum experienced earlier in Lululemon's 2014-15 financial year.

Its fourth-quarter net income was up one per cent from a year earlier at US$110.85 million, while income per share was 78 cents US, up from 75 cents US.

Analysts had estimated 75 cents per share of earnings for the fourth quarter, according to Thomson Reuters.

Lululemon's revenue for the fourth quarter was in line with estimates, rising to US$602.49 million from US$520.99 million. About 19 per cent of the revenue was from online and other direct sales to consumers.

"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,'' said Laurent Potdevin, Lululemon's chief executive.

"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.''

The company has made several changes since it discovered two years ago that some black Luon pants were too sheer and controversial comments about the gaffe by Lululemon founder Dennis (Chip) Wilson. Potdevin was appointed CEO in late 2013 as part of a rebuilding effort and Wilson left the board, his last position with the company, last month.

For the full financial year ended Feb. 1, Lululemon had US$1.797 billion of revenue and $239.03 million of net income, or $1.66 per share. A year earlier, annual net income was $279.5 million or $1.91 per share and revenue was $1.59 billion.

Lululemon estimates the current year's annual revenue will be between US$1.97 billion and US$2.02 billion, up about 11 per cent at the mid-point, not counting the impact of currency changes, while earnings per share is estimated at $1.85 to $1.90.

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