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06/01/2018

Lululemon maintains momentum in Q1 amid search for CEO

Lululemon Athletica posted a strong set of results for its first quarter, driven by surging sales.

The apparel retailer maintained its momentum as it continues to search for a CEO to replace Laurent Potdevin, who left in February after allegations of unprofessional behavior. Lululemon chairman Glenn Murphy, formerly CEO of Gap Inc., is leading the company while it conducts a search for a new chief executive.

Lululemon reported net income of $75.2 million, or 55 cents a share, for the quarter ended May 5, compared with $31.3 million, or 23 cents a share, in the year-ago period. Adjusted earnings were 55 cents a share. Analyst had estimated earnings of 46 cents a share.

Revenue rose to $649.7 million, more than expected, from $520.3 million. Comparable sales jumped 19%, easily topping analysts’ estimates of 12.2% growth.

Analyst Neil Saunders, managing director of GlobalData Retail, commented that Lululemon’s “mindful approach,” which is always looking for ways to combine great design with great function, has allowed the bramd t differentiate itself from rivals — and persuade its customers to pay very full prices for its products.

“On the matter of pricing, it is also worth noting that Lululemon's price integrity is another reason for its outperformance,” he said. “Promotional periods notwithstanding, products are not discounted, and customers know they must pay the full price if they want the product. Careful control of distribution, with items only really only available via Lululemon's site or stores, is fundamental to this success.”

For the full year, Lululemon boosted its earnings guidance to a range of $3.10 to $3.18 a share, up from the $3 to $3.08 projected in March.

On the chain’s quarterly earnings call, Murphy said Lululemon has interviewed a number of potential CEO candidates for the post and will discuss them with the company’s full board shortly.

“I think we can now take this search to the next step,” Murphy said.