Lululemon profits shrink in Q2

Markdowns and the costs of expansion hurt Lululemon profits in the second quarter, but the athleisure retailer did post an impressive jump in same store sales.

For the second quarter ended Aug. 2, net revenue increased 16% to $453 million from $390.7 million in the second quarter of fiscal 2014. Same store salesincreased by 6%.Gross profit for the quarter increased by 7% to $212 million, and as a percentage of net revenue gross profit was 46.8% for the quarter compared to 50.5% in the second quarter of fiscal 2014.Diluted earnings per share for the quarter were 34 cents on net income of $47.7 million, compared to diluted earnings per share of 33 cents on net income of $48.7 million in the second quarter of fiscal 2014.

Laurent Potdevin, lululemon's CEO, said: "We exceeded our revenue targets for the past quarter, supported by strong performance from both our store and e-commerce channels. Looking to the remainder of the year, our team is laser focused on meeting our strategic key goals: grow our global collective, relentlessly innovate our product lines and continue to create transformational experiences for our guests. As our momentum continues to build, we are excited by the progress made with our international expansion, the launch of our new women’s pant wall last week, and successful brand-building events occurring around the globe."

For the third quarter of fiscal 2015, Lululemon expects net revenue to be in the range of $477 million to $482 million based on same store sales in the high single digits on a constant dollar basis. Diluted earnings per share are expected to be in the range of 35 cents to 37 cents for the quarter.