Lululemon makes ‘meaningful progress’ in second quarter

Although Lululemon CEO Laurent Potdevin recognizes that there is still much to be done, he praised the company’s “meaningful” progress on building a scalable foundation for its next phase of global growth.

Net revenue for the quarter increased 13% to $390.7 million from $344.5 million in the second quarter last year.

Comparable store sales for the quarter decreased by 5% on a constant dollar basis, and direct to consumer revenue increased 30% on a constant dollar basis. Total comparable sales, which includes comparable store sales and direct to consumer, remained flat for the quarter on a constant dollar basis.

Gross profit for the quarter increased 6% to $197.3 million, and as a percentage of net revenue gross profit decreased to 50.5% for the quarter from 54.0% in the second quarter of fiscal 2013.

Diluted earnings per share for the quarter were $0.33 on net income of $48.7 million, compared to diluted earnings per share of $0.39 on net income of $56.5 million in the second quarter last year.

The company ended the quarter with 270 stores.

"We are pleased to be on track with the implementation of our strategic road map, and are starting to see the results of our work across product, brand and international expansion," said Potdevin.

Looking ahead to the third quarter, the company anticipates net revenue to be in the range of $420 million to $425 million based on a total comparable sales increase in the low single digits on a constant-dollar basis. Diluted earnings per share are expected to be in the range of $0.36 to $0.38 for the quarter.

For the full fiscal 2014, the company now anticipates net revenue to be in the range of $1.78 billion to $1.8 billion based on a total comparable sales increase in the low single digits on a constant-dollar basis. Diluted earnings per share are expected to be in the range of $1.51 to $1.56 for the full year, or $1.72 to $1.77 normalized for the non-recurring tax adjustment incurred in the first quarter of fiscal 2014 related to the repatriation of foreign earnings that will be used to fund the share buyback program.