* Investors relieved situation not worse -analysts
* First European store to open next week in London
* 2014 seen as "investment year," aims to speed growth in
* Shares rise 6 pct
(Adds analyst comments, details on global expansion and
competition, updates stock price)
By Solarina Ho
TORONTO, March 27 Lululemon Athletica Inc's
new chief executive pledged on Thursday to speed up the
yogawear retailer's global expansion while avoiding missteps
like last year's embarrassing recall of its trademark yoga
pants, helping boost its once high-flying stock.
Investors, reassured by comments made during a conference
call and more optimistic about Lululemon's long-term prospects,
pushed its shares up as much as 10 percent on Thursday. The
stock ended 6.2 percent higher at $51.20 on the Nasdaq.
"The guidance on the face of it seemed weak - below the
consensus expectations that are out there - but I think there's
a view that management is being conservative," said ITG
Investment Research retail analyst Matthew Jacob.
He said there was also "a little bit of relief that trends
could've been worse."
Chief Executive Laurent Potdevin, most recently president of
trendy footwear brand TOMS Shoes, was brought in last year with
the expectation he would lead Lululemon's push into Europe and
His first major public comments as chief executive, which
come as the company opens its first European store in London
next week, helped solidify that view.
"2014 is an investment year with an emphasis on
strengthening our foundation, reigniting our product engine and
accelerating sustainable and controlled global expansion," he
said on a conference call.
"I see significant potential to grow both domestically and
internationally ... We see clear evidence of demand, both in
Asia and Europe, with several countries ready for stores."
Potdevin said the company was evolving its strategy and will
"attack different regions and different countries"
The company, which is banking on London to help showcase the
brand in Europe, plans to open a second store in the city by the
end of this year. It plans to open up to 42 new stores this
year, in line with 2013.
Lululemon also has more than a dozen "showrooms," or small
test boutiques, outside of North America, including six in Asia
and nine in Europe. It hopes showrooms in cosmopolitan cities
like Hong Kong will lay the groundwork for growth in Asia.
"It's a brand that I think has tremendous transferability
across borders and they shouldn't really slow down on that
opportunity," said Canaccord Genuity analyst, Camilo Lyon.
Few Canadian retailers have successfully cracked the U.S.
market, let alone succeeded internationally.
There were several positives from the call that indicated
the company's consumer base was not being eroded, said Lyon,
including new-store sales that were performing above average on
a per-square-foot basis.
Potdevin, who took the helm in January, also said seasonal
products were selling out four times faster than anticipated.
As Potdevin continues to repair Lululemon's image following
the recall of its signature yoga pants that were deemed too
see-through, he must also stave off competition.
Rival workout gear makers such as Gap Inc's Athleta
brand are aiming to take a bite out of a market that Lululemon
ostensibly created, with similar products.
"Unlike a few years ago, we are not the only game in town
... we understand that our guests have choice, and sustaining
that loyal relationship is a priority," Potdevin acknowledged.
Lululemon forecast lower-than-expected first-quarter and
full-year results as it struggled to recover from the March 2013
In the year since the yoga pants fiasco, Lululemon's shares
slumped 30 percent.
The retailer posted an almost flat year-on-year profit for
the fourth quarter of 2013 and reported a decrease in comparable
stores sales, its first such fall since 2009.
However, its overall results were marginally better than it
had warned in January.
The company forecast first-quarter profit of 31 to 33 cents
per share on revenue of $377 million to $382 million and flat
total combined comparable store sales.
Analysts, on average, had estimated first-quarter profit of
38 cents per share on revenue of $389.4 million, according to
Thomson Reuters I/B/E/S.
For the 2014 fiscal year, Lululemon forecast profit of $1.80
to $1.90 per share on revenue of $1.77 billion to $1.82 billion,
based on a total combined same-store sales increase in the low
to mid-single digits in percentage terms.
For the full year, analysts had forecast earnings of $2.14 a
share and revenue of $1.82 billion.
For the fourth quarter ended Feb. 2, Lululemon earned $109.7
million, or 75 cents per share, compared with $109.4 million, or
75 cents per share, a year earlier.
Analysts, on average, had expected 72 cents per share.
Net revenue increased 7 percent to $521.0 million.
During the fourth quarter, the company added seven new
stores for a total of 254 stores internationally, including its
standalone store for girls, Ivivva Athletica.
(With additional reporting by Swetha Gopinath in Bangalore;
editing by Jeffrey Hodgson, Jeffrey Benkoe, Sophie Hares and