September 10, 2010 / 12:25 PM / 7 years ago

UPDATE 3-Lululemon doubles profit, ups outlook, shares rise

4 Min Read

* Sees FY10 rev of $645 mln-$650 mln

* Sees FY10 EPS of $1.18-$1.22

* Q2 EPS $0.30 vs $0.13 last year

* Shares rise as much as 14 percent (Updates with comments from conference call and analyst, updates share price. In U.S. dollars unless noted)

By Solarina Ho

TORONTO, Sept 10 (Reuters) - Canadian yoga and running-wear retailer Lululemon Athletica Inc LLL.TO (LULU.O) raised its full-year financial forecasts on Friday as it reported its quarterly profit more than doubled.

In response, the company's shares rose as much as 14 percent on the Nasdaq before falling back a bit. The stock was among the most active issues.

"They basically crushed everyone's expectations for the second quarter, even above what I would say was an elevated expectation," said analyst Taposh Bari of Jefferies & Co.

"More important was the fact that they raised their second-half guidance, which no one else in retail is doing."

The specialty clothier, which ended its second quarter with 130 stores in North America and Australia, now expects net revenue of $645 million to $650 million and earnings per share of $1.18-$1.22 for its fiscal year.

The company's previous forecast was for revenue of $620 million to $635 million and earnings per share of $1.05 to $1.10.

"We will plan our business with the expectation that we will maintain our strong operating margin in 2011," Chief Executive Christine Day said on a conference call with analysts.

The Vancouver-based company has carved a niche market unmatched by other retailers of athletic wear, targeting fitness-oriented women who also look for fashion, Bari said.

Lululemon stores are mostly corporate-owned although there are a few franchised stores. It plans to open 12 new locations in North America and two in Australia this year. It plans 20 to 25 new stores in 2011.

In addition, it expects to have a total of 46 showrooms in North America and two in Australia by the end of the year.

Lululemon showrooms are community-oriented stores that offer fitness classes and incorporate local events.

The company said its working capital position is healthy and that it has no debt.

Strong Sales

Lululemon earned $21.8 million, or 30 cents a share, in its second quarter, up from $9.2 million, or 13 cents a share, in the year-before quarter.

The company's net revenue rose 56 percent to $152.2 million.

Internet sales doubled and represented 6 to 7 percent of total revenue. "We are just scratching the surface in ecommerce and will continue to add resources in order to push this channel to more than 10 percent of our sales in the near term," Day said.

The company said it expects revenue of $155 million to $160 million and earnings of 22 cents to 24 cents a share in its third quarter.

It forecast a percentage increase in the "high teens" in third-quarter same-store sales.

Shares of the company, which had lost about 10 percent in value over the past three months, were up $4.34, or 12.1 percent, at $40.19 on Nasdaq at midday on Thursday. On the Toronto Stock Exchange, they were up C$4.59, or 12.4 percent, at C$41.65.

$1=$1.03 Canadian Additional reporting by Isheeta Sanghi in Bangalore; editing by Peter Galloway

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