Lululemon's quarterly profit beats on higher online and same-store sales

(Reuters) - Canadian athletic apparel maker Lululemon Athletica LULU.O reported a third-quarter profit above analysts' estimates, driven by a rise in its established store sales and higher online traffic.

People walk past a store by yogawear retailer Lululemon Athletica in New York City, U.S., March 30, 2017. REUTERS/Brendan McDermid

Total comparable sales, a key indicator for the athleisure company’s business, rose 17 percent, while analysts on average were expecting a rise of 13.7 percent.

Lululemon, which popularized "athleisure wear" by turning pricey women's yoga wear into mainstream fashion, has been investing in expanding its online presence and offering more menswear to lure customers in a highly competitive retail industry, dominated by the likes of Under Armour Inc UAA.N, Nike NKE.N and Gap Inc GPS.N.

The company said traffic to its e-commerce website rose more than 35 percent in the quarter while its online business in China rose 76 percent. Lululemon has been expanding its online presence in Asia including China, South Korea and Japan.

“All good signs of what the future holds for us across Asia,” Chief Operating Officer Stuart Haselden said on a post-earnings call.

Lululemon said it expects fourth-quarter revenue between $1.12 billion and $1.13 billion, almost in line with analysts’ estimates of $1.12 billion.

Shares of the company, which initially fell as much as 5 percent, pared most of its losses to trade up at $131.50 after the bell.

“LULU tends to guide conservatively, setting up for beats,” Simeon Siegel analyst at Instinet said.

The company’s net income rose to $94.4 million, or 71 cents per share, in the quarter ended Oct.28, from $58.9 million, or 43 cents, a year earlier..

Total revenue rose to $747.7 million from $619 million a year ago.

Excluding items, Lululemon earned 75 cents per share.

Analysts on average had expected the company to report a profit of 70 cents per share and revenue of $737.05 million according to IBES data from Refinitiv.

Reporting by Arundhati Sarkar and Laharee Chatterjee in Bengaluru; Editing by Shailesh Kuber