Economic woes apparently don't apply to the holistic yoga world of Canadian retailer Lululemon Athletica Inc. Fourth-quarter earnings multiplied by more than 16 times on revenues that doubled.
The company also designated Christine Day, who joined Lululemon in January as executive vice president of retail operations, to take over as chief executive officer, president and chief operating officer when Robert Meers retires on June 30.
For the three months ended Feb. 3, the Canadian firm saw its earnings increase to $14.6 million, or 21 cents per diluted share, from $887,000, or 1 cent, in the fourth quarter last year.
Sales for the quarter more than doubled to $105.1 million from $52.2 million, driven by store growth and comps of 41 percent, or 24 percent on a constant dollar basis.
"The key to our success is not one thing — it's a combination of innovative product, great store locations, a strong philosophy and the opportunity to be a part of a macro trend for healthy living that is being led by women, while most of our competition is based around male team athletes," Meers told WWD. "I am bullish about our opportunity to continue to grow in this marketplace; we have no reason to believe we should slow down. The economic environment has helped us in terms of getting 'A' locations in stores and gives us leases we can live with for 10 years. Fortunately, we have an incredibly strong balance sheet to be able to seize opportunities."
Meers, who joined Lululemon in December 2005 and led the company through its initial public offering in July, will serve as an adviser until the end of the company's 2008 fiscal year. Meers, 64, and his wife plan to go into business together, though he declined to give details.
Day spent 20 years at Starbucks, most recently as president of its Asia Pacific Group, and she compared the opportunities of the yoga company with that of the coffee behemoth.
"Lululemon reminds me very much of the early days at Starbucks," Day said on a conference call Wednesday morning. "I am as excited about the opportunity of this organization as I was when I joined Starbucks 20 years ago."Meers said to expect key upcoming executive appointments at Lululemon in distribution, logistics, planning and merchandising, as well as a replacement for Day's role as executive vice president of retail.
Despite the growth, not all was good news: The company said it would shutter its operations in Japan, where it has four stores that have been "taking up a disproportionate amount of management time and attention," according to Meers. The only other area outside North America where Lululemon has stores is Australia.
Lululemon is focusing on North America, where it plans to open 35 stores this year. It also plans to launch an e-commerce operation.
For the company's first fiscal year as a public company, earnings tripled to $30.8 million, or 45 cents per diluted share, from $7.7 million, or 11 cents, last year. Annual sales increased 85 percent to $274.7 million from $148.9 million.
For fiscal 2008, the company said it expects 70 to 72 cents of diluted earnings per share.
Lululemon's stock closed down 2.44 percent to $30.80 on Wednesday.
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