Vancouver yoga-wear maker Lululemon Athletica Inc. (NASDAQ:LULU) has reported fourth quarter earnings that beat analysts’ expectations, sending the company’s stock price up in morning trading March 30.
The retailer had net revenue of US$704 million in the quarter ended January 31, which is 17% higher than the US$602 million reported in the same period last year. It also beat Lululemon’s own outlook as reported in its previous quarterly results. Earnings per share increased 9% to US$0.85 from US$0.78 last year.
“2015 was a transformative year for Lululemon, one where we successfully reached key milestones that are positioning us for continued growth and improved profitability in the next five year,” company CEO Laurent Potdevin said in a conference call for shareholders.
“While we have room to improve, we are well positioned to deliver solid earnings growth in 2016.”
Analysts had expressed concern in the previous quarter about the company’s high inventory levels. As of January 31, inventory was valued at 284 million, up from US$208 million last year.
“While inventory levels are still elevated, they are significantly lower than our prior estimates,” Potdevin said March 30. “This reduction happened while delivering gross margins above the high end of our guidance.”
Margins have decreased year-over-year, however, from 51.5% last year to 50.3%. While net income grew 5% to US$117 million compared with almost US$111 million in Q4 last year, cost of goods sold jumped around 39% in the quarter, growing to US$350 million compared with US$292 million last year. Income from operations as a percentage of net revenue was 23.6%, down from 26.1% last year.
Comparable store sales increased 5% in the quarter, and direct-to-consumer net revenue grew 28% to US$146.3 million.
For the fiscal year ended January 31, net revenue grew 15% to US$2.1 billion, comparable store sales increased 4% and direct-to-consumer net revenue increased 30%.
As of press time, shares of Lululemon were trading at US$67.17 – an increase of 9.68%.
@EmmaHampelBIV
