BUSINESS

Lululemon's Q1 Revenue Up, Exceeds Analyst Expectations

06/09/2015 06:18 EDT | Updated 06/09/2016 05:59 EDT
AP
Yogawear retailer Lululemon Athletica Inc. says bulking up its web inventory helped meet a jump in online orders during weeks of nasty winter weather.

Chief financial officer Stuart Haselden told analysts on its first-quarter results conference call Tuesday that Lululemon responded to a couple of factors in the period, starting with the setbacks of a temperature drop in February that kept many yogis indoors.

"Certainly weather was an issue in the early part of (the quarter), which likely benefitted the e-commerce results," he said.

He attributed part of the web growth to a shorter distance between the distribution centres to the customer, which made it faster to get products into the hands of shoppers during a period of the year when transportation can be slowed by weather conditions.

"We were able to have a better inventory position in e-commerce which I think drove the upside," he said.

"There's nothing that we would look at from a direct standpoint that would suggest the increases we saw in the first quarter are not sustainable."

Overall, Lululemon (NASDAQ:LULU) reported that its first-quarter revenue increased more than anticipated and the company raised its full-year 2015 forecasts. The outlook offers another sign the retailer is emerging from the avalanche of problems caused by a recall of its signature black yoga pants, which were criticized for being made with fabric that was too sheer.

The Vancouver-based clothing company, which reports in U.S. dollars, says it now expects revenue in a range of between $2 billion and $2.05 billion for the year, which is about $30 million higher than estimates released in March.

In the first quarter ended May 3, net income grew to $47.8 million compared to $19 million a year earlier. The results were equal to 34 cents per share — one cent above an average estimate compiled by Thomson Reuters.

Overall revenues grew 10 per cent to $423.5 million from $384.6 million in the comparable period.

Nearly one-fifth of the growth came from Lululemon's e-commerce platform, which saw revenues increase 27 per cent to $83.6 million.

Haselden said website sales will continue growing at a clip somewhere around the same level as the first quarter, though he didn't provide specific figures to analysts.

Shares of Lululemon were ahead six per cent, or US$3.85, to $65.37 in late morning trading on the Nasdaq.

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