Investor Alert

June 7, 2012, 8:20 a.m. EDT

Lululemon profit rises 40%, beating expectations

By Judy McKinnon

Lululemon Athletica Inc. (NAS:LULU) said first-quarter earnings climbed 40%, beating analyst and company expectations, which the maker of high-end yoga wear attributed to increased inventory levels that helped bolster revenue.

Vancouver-based Lululemon said earnings for the quarter ended April 29 rose to $46.6 million or 32 cents a share from $33.4 million or 23 cents a year earlier.

The Thomson Reuters mean estimate was for a profit of 30 cents a share in the latest quarter, while the company had guided for 28-29 cents a share.

Revenue of $285.7 million outpaced analyst expectations of $271 million, and was up from $186.8 million a year earlier. Lululemon had guided for revenue of $265-$270 million.

First-quarter same-store sales were up 25% on a constant-dollar basis, the company said.

"Our strategy to increase inventory levels led to strong revenue growth and earnings performance in the first quarter as our guests responded well to our spring styles and colors," Chief Executive Christine Day said in a statement.

For the second quarter, Lululemon said it expects net revenue of $273-$278 million and earnings of 28-30 cents a share. Projections are slightly below analyst calls for revenue of $290 million and earnings of 33 cents a share next quarter.

The company also updated guidance for fiscal 2012 and said it now expects revenue of $1.32-$1.34 billion and earnings of $1.55-$1.60 a share. It previously guided for revenue of $1.3-$1.325 billion and earnings of $1.50-$1.57 a share.

Premarket on Nasdaq, shares are off about 13% at around $61.00

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