Canadian Lululemon athletica presents still good results but looses CEO
The first quarter of Canadian lululemon athletic (ending May 5, 2013) shows good results, however some traces of the past difficulties with the pull back of black luon pants are detectable. Even though CEO (for the past 5.5 years) Christine Day, despite the tremendous success she had, has now announced her departure but she will stay on until a successor is named
Many will regret the departure of CEO Christine Day, because she was an extraordinary strong and outspoken CEO. She stated “Being a part of lululemon (a yoga inspired athletic apparel company that create components for people to live long, healthy and fun lives by producing products to help keep people active and stress free) for the past five and a half years has been an incredible journey. I am proud of building a world class team has produced one of the best growth, bran and profit stories in retail. Plans have been laid for the next five years and a vision set forth next ten. Now is the right time to bring in a CEO who will drive the next phase of lululemon’s development and growth. I will continue to actively lead the organisation while the Board searches for a new CEO, and will work to ensure a smooth transition”.
Chip Wilson, Chairman of the Board of Directors claimed “Christine has been an exceptional leader for lululemon, successfully embracing the culture while growing the business and returning value to all of our stakeholders, including our guests, employees, partners and shareholders. I thank Chrstine for her leadership, contributions and commitment to lululemon. I am confident that we will find the right person to lead this strong team and continue to build on the excellent foundation”.
As to the results of the first fiscal quarter Christine Day commented: “The past quarter has been one of the most important in our company’s history. While we regret that we had quality issues with our black luon, we are proud of the organisation’s ability to get luon delivered back into our stores within 90 days of having pulled it from our line, all the while keeping our guests happy and engaged with the brand.
The relevant key figures are that revenue for the quarter increased 21 % from USD 285.7 million ot USD 345.8 million against the first quarter of fiscal 2012. Comparable stores sales for the first quarter increased by 7 % on a constant dollar basis. Direct to consumer revenue increase 40 % to USD 54.0 million, or 15.6 % (13.5 %) of total company revenues. Gross profit increased 9 % to USD 170.7 million, including a provision of USD 17.5 million for inventories to cost of sales related to the pull back of black luon pant. And as a percentage of net revenue gross profit decreased to 49.4 % (55.0 %). Income from operations decreased 10 % to USD 65.9 million, and as a percentage of net revenue was 19.1 % (25.6 %). The company ended the first quarter with USD 588.4 million (USD 424.3 million) in cash. Inventory at the end of the first quarter totalled USD 143.7 million (USD 107.7 million). The company reports 218 stores (eight openings and one closure) in North America and Australia.
The company has given written notice to the Toronto Stock Exchange (TSX) regarding the delisting of its common stock. The shares are continuing to be listed with NASDAQ in New York where most of the share transactions took place in the past, and the Canadian shareholders will be able to continue to trade through their brokers on that market.