Canadian yogawear retailer Lululemon Athletica has posted fourth-quarter net sales that outperformed its own expectations a month after analysts warned CEO Laurent Potdevin’s exit would be a blow to the retailer.
For the period ended 28 January, net income slipped 12% to $119.76m from $136.14m, while gross margin was 56.3%, an increase of 210 basis points compared to the fourth quarter of fiscal 2016.
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The Vancouver, British Columbia-based company reported net revenue ahead of its own expectations for the period, with net sales coming in at $928.8m. This was up 18% from $789.9m last year and ahead of guidance released in January that forecast net revenue to be in the range of $905m to $915m.
Total comparable sales increased 12%, while comparable store sales were up 2% for the period.
For the full year, Lululemon said net income totalled $258.66m, a 14.7% decline from earnings of $303.38m the previous year.
Net sales in the twelve months reached $2.65bn, an increase of 13% compared to fiscal 2016, while total comparable sales increased 7%, and comparable store sales by 1%.
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By GlobalData“We are seeing strong momentum across our business as we now move into 2018, which is further positioning us to achieve our 2020 revenue goal of $4bn,” said COO Stuart Haselden.
Former Gap Inc CEO Glenn Murphy, who is leading the company following the departure of Potdevin, added the business is pleased with its results for both the fourth quarter and fiscal year 2017. The executive chairman of Lululemon’s board said the firm continues to execute successfully on its global growth strategies.
Looking ahead, Lululemon said it expects net revenue to be in the range of $612m-$617m for the first quarter of fiscal 2018, based on a total comparable sales increase in the low double digits on a constant dollar basis.
For the full fiscal 2018, meanwhile, it forecasts net revenue of between $2.99bn and $3bn, based on a total comparable sales increase in the mid-to-high single digits on a constant dollar basis.
There was no mention of Lululemon’s search for a new CEO however, which has been ongoing since the sudden departure of Potdevin amid allegations of misconduct last month.
Speaking in the wake of his departure, analysts said Potdevin’s exit would be a blow to the retailer.
Lululemon CEO Potdevin exits over misconduct
Oliver Chen, analyst at Cowen & Company, notes the firm is “impressed and encouraged” by the momentum Lululemon is carrying into the first quarter of fiscal 2018 from its fourth-quarter result.
He added: “We have long been fans of Lululemon’s fabric platform, and believe the technical offering of various fabrications continues to drive loyalty.”
Meanwhile, FBR & Co analyst Susan Anderson said the firm remains on the sidelines given valuation and risks with a slowing athleisure market.
