Vancouver—Although Lululemon Athletica Inc. posted today a 51% increase in its third quarter profit and a 31% increase in sales, shares of the Canadian yoga wear retailer fell to their lowest point in three years in early trading.
The company’s profits beat analysts’ estimates but its sales missed. That combined with the specialty retailers’ continued problems keeping inventory at levels to meet demands, pushed down on the company’s stock.
For the quarter ended Oct 30, Lululemon posted a net profit of $38.8 million, or 27 cents a share, from $25.7 million, or 18 cents a share, in the same quarter last year.
Total sales jumped 31% to $230.2 million from $175.8 million last year, as comparable store sales increased 16%.
‘Unmet Sales Demand’
While the company’s third quarter earnings beat analysts’ estimate for 25 cents a share, it missed their sales forecast for $235.3 million.
“These strong revenue results were at the top end of our guidance and as anticipated, we also had unmet sales demand through out the quarter,” Christine Day, ceo, told analysts on a conference call.
Lululemon has struggled to maintain consistent inventories since the end of 2010, when it posted particularly strong sales. Day said the situation has improved in the current quarter.
“Our goal for Q4 was to break the inventory cycle we were in all year, and we have achieved it,” she said. “We have the right mix of styles and color, and a healthy and clean inventory.”
Looking ahead, the company expects fourth quarter sales to hit $327 million to $332 million based on a comparable store sales increase in the low to mid-teens.