Lululemon ended its fiscal year on a high note, despite the recent and abrupt departure of its chief executive officer.
The yoga-centric athleticwear company saw sales for the year ended Jan. 28 increase 13 percent to $2.6 billion and profits increase 8 percent to $456 million. Comparable-store sales also grew by 7 percent, with owned retail sales equaling $1,554 per square foot, while direct-to-consumer, or e-commerce, sales grew by 27 percent, compared with 2016.
Diluted earnings per share took a hit, however, coming in at $1.90 per share, compared to $2.21 in 2016. But adjusted earnings, which don’t include millions of dollars in costs related to Lululemon’s decision last year to close nearly all of its Ivivva brand stores and refocus its online and one-time costs from changes to the tax code, came in above guidance at $2.59 per share.
Wall Street was happy with that and sent the company’s stock up 6 percent to $84.95 in after-hours trading — an all-time high.
As for the company operating without a chief executive officer since the start of February — after Laurent Potdevin suddenly resigned amid rumors of misconduct that the company has declined to clarify — Glenn Murphy, who’s acting in an oversight role from his position as executive chairman said during a call with analysts that the current management team isn’t on pause.
“They’re not waiting around,” Murphy said. “They’re pushing aggressively to get Lululemon to new heights.”
But a search for a new ceo is well underway, according to Murphy.
“We’ve met with a number of great candidates and people who put their hands up for this role,” he said. “The board is very confident in our ability to find a top, proven, global consumer executive. We’re going to take our time and meet as many people as we can before we make a decision.”
Even without a formal ceo, the company is executing on broad efforts to reach its goal of $4 billion in revenue by 2020, including product innovation and international expansion, as well as a new focus on data analytics.
Murphy said recent meetings between the board and management showed that “we’re a little behind on data analytics and the power of that” but that people have been brought in “who are already working hard to turn this into a strength.” During the holiday season, Lululemon doubled its e-mail file.
During the year, Lululemon is set to open another 40 to 50 stores, with the majority coming in international markets like Asia, where it’s seeing solid growth and will add around 20 stores. Chief financial officer Stuart Haselden also noted Lululemon’s “very successful” T-mall store launch last year, and said that will continue. The company also intends to open between 5 to 10 stores throughout the U.K., France and Germany.
“We are encouraged by recent trends in Europe and continue to see this as a major opportunity for us, although likely slower build versus Asia,” Haselden said.
North America is also starting to turn around, with Celeste Burgoyne, executive vice president of the Americas, noting an increase in store comps and traffic increasing by low-single digits during the fourth quarter.
She added that the positive momentum, created by a larger economic shift as well investments in marketing, should carry over into the first quarter of 2018. The company expects the first quarter to pull in around $615 million in revenue.
Looking ahead to the full year, the company expects sales to come in around $3 billion, based on an expectation of total comparable sales growth in the mid to high-single-digit range. Earnings are expected to come in around $3 per diluted share.
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