Lululemon Sees Earnings Below Forecasts

Canadian yogawear retailer Lululemon Athletica forecast earnings and revenue below analysts' expectations, saying it would spend more on innovation to drive sustainable growth.

The company's shares slid in premarket trading on Thursday as investors shrugged off the stronger-than-expected results for the fourth quarter ended on Feb. 1.

Shares of Lululemon, which warned in January that margins would trough in 2015, fell more than 7 percent in early trading but partly rebounded to trade down 2.4 percent at $59.50 at 0830 EDT (1230 GMT).

"At first glance, guidance appears conservative," SunTrust analyst Pamela Quintiliano said in a note. "We look forward to hearing more information on the call regarding current trends to ascertain if this is indicative of a stall in the turn, or a cautious approach."

The Vancouver-based company forecast earnings of 31 cents to 33 cents a share for the current quarter. Analysts on average were expecting 39 cents a share, according to Thomson Reuters I/B/E/S.

Lululemon said it expected revenue of $413 million to $418 million for the quarter, below the analysts' average estimate of $442 million.

The company also forecast fiscal-year earnings of $1.85 to $1.90 a share on revenue of $1.97 billion to $2.02 billion. Analysts had expected a profit of $2.06 a share on sales of $2.05 billion.

Lululemon said it expected its total comparable sales, which include same-store and online sales, to increase at a low single-digit percentage rate in the first quarter and in the mid single-digits for the full year.

The company said its fourth-quarter profit rose to $110.9 million, or 78 cents a share, from $109.7 million, or 75 cents a share, a year earlier. Analysts had expected 73 cents a share.

Comparable sales increased 8 percent, while net revenue jumped 16 percent to $602.5 million, edging past Wall Street's forecasts of $602.4 million.

"Our solid performance in the fourth quarter builds on the momentum that began in the third quarter and reflects improved traffic and a strong guest response," Chief Executive Laurent Potdevin said in a statement.

Lululemon shares have declined about 10 percent since the beginning of March. They had rallied in previous months on signs that the company was getting back on track after a high-profile yoga pants recall led to executive changes and a supply chain overhaul. (Reporting by Euan Rocha and Solarina Ho in Toronto and Sayantani Ghosh in Bangalore; Editing by Maju Samuel, W Simon and Lisa Von Ahn)