By  on December 9, 2010

Christine Day, chief executive officer of Lululemon Athletica Inc., credits the company’s powers of observation for helping it blow past analysts’ estimates of third-quarter earnings.

“Where Lululemon differentiates itself is, we watch what people do,” Day told WWD during a visit to New York Thursday. “Statistics will tell you one thing, but behavior is not a number. We call it listening like an entrepreneur.”

Earlier in the day, the company reported an 82.7 percent increase in third-quarter profits, buoyed by a 200 percent jump in its e-commerce sales. The company’s stock rose 14.1 percent to $63.50 at the end of trading, after the maker of high-performance, brightly colored activewear provided fourth-quarter guidance that exceeded analysts’ estimates.

During the third quarter ended Oct. 31, the Vancouver-based firm’s net income rose to $25.7 million, or 36 cents a diluted share, from $14.1 million, or 20 cents, in the year-ago period. Sales expanded 55.7 percent to $175.8 million from $112.9 million a year earlier. Analysts projected EPS of 25 cents on sales of $159 million, according to Yahoo.

Comparable-store sales jumped 29 percent, on top of a 10 percent increase last year, as gross margin, aided by soaring e-commerce sales, improved to 55.1 percent of sales versus 49.9 percent of sales in the 2009 period.

Day noted that the company, known mostly for its following among female yoga practitioners, has expanded its reach to other categories, such as running. It’s part of its strength, the ceo noted, of understanding and in many cases predicting what its customers want.

“Running is the biggest growth category in sports. Yoga is growing, too,” said Day, who emphasized that many customers use yoga to cross-train. In the third quarter, running apparel made up 20 percent of sales.

Men’s, 12 percent of sales in the third quarter, could grow to between 15 percent and 17 percent in the long term.

“We believe that we are just scratching the surface in e-commerce,” Day said. “We improved our inventory position to support sales in the back half of the third quarter, which allowed e-commerce to jump closer to a natural level for this early-stage business.”

E-commerce accounted for about 7 percent of the business in the quarter and is only expected to increase as the company transitions to a new platform in the first quarter. In the “short- to mid-term,” the firm anticipates e-commerce to hit 10 percent of sales.

The company anticipates fourth-quarter EPS of between 46 cents and 48 cents on sales in the range of $210 million to $215 million. Wall Street is looking for 41 cents a share on $201.3 million in sales.

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