• Q4 profit increases 5.9% to $117.4m
  • Revenue up 17% to $704.3m
  • One analyst believes company needs to refresh brand
One analyst says Lululemon needs to focus on refreshing its brand

One analyst says Lululemon needs to focus on refreshing its brand

Lululemon Athletica needs to focus on refreshing its brand to entice new and existing customers into its stores, one analyst has said, after the Canadian yoga wear brand continues to clear inventories and issued conservative guidance for its first quarter.

The comments came as the company saw its fourth quarter net income rise 5.9% to reach US$117.4m for the 13 weeks to 31 January, compared to $110.9m in the same period of the prior year. 

Revenue increased 17% to $704.3m from $602.5m last year, and comparable store sales edged up 1%. Gross margin, however, slipped to 50.3% from 51.5% a year ago. 

For the full year, net income rose 11.3% to $266m from $239m, while sales grew 15% to $2.1bn from $1.8bn last year. 

For fiscal 2016, the company expects net revenue to range from $2.29-$2.34bn and earnings per share to be between $2.05 and $2.15. 

"In the year ahead, Lululemon will continue to make progress on the sales front, however we maintain that underlying sales will be fairly weak," says Conlumino analyst Neil Saunders. 

"While we do not anticipate the market for athleisure to slow down any time soon, we do believe that it is now much more difficult to grow simply because there are so many players vying for share. Against this backdrop Lululemon needs to focus on refreshing its brand, both to draw existing shoppers back to its stores and attract new and lucrative consumers."

Cowen and Co analyst Oliver Chen adds: "Fewer distractions and more control should enable Lululemon to focus on product innovation and differentiation versus competition, which will be essential to sustain price leadership in bottoms and execute on necessary changes in women's tops."