Lululemon’s increases in net revenue, gross profit and comparable-store sales beat expectations, but shares slid after the company said it anticipates flat comparable-store sales in the fourth quarter.
According to reports, shares dropped 10.7% to $61 after the company posted its financial results for the third quarter ended Nov. 3, which saw net revenue increase 20% to $379.9 million from $316.5 million in last year’s third quarter. Comparable-store sales in the quarter increased 5%.
Direct to consumer revenue in the quarter increased 37% to $62 million, representing 16.3% of total company revenues — an increase from 14.3% of total company revenues in last year’s third quarter. Gross profit for the quarter increased 17% to $204.6 million.
"We are proud of our third quarter results, with sales in line with our expectation and earnings ahead of our guidance and rebounding to a double digit growth rate," said exiting CEO Christine Day. "This so far has been a year of challenges, learning and growth for Lululemon, and while our outlook for the fourth quarter is being impacted by both macro and execution issues, I believe that the investments we are making in the business combined with the team in place create a strong platform for growth in the years ahead."
As it enters the fourth quarter, the company expects net revenue to be in the range of $535 million to $540 million based on flat comparable-store sales.
The company this week named former Toms president Laurent Potdevin as its new CEO and elected him to its board of directors. He assumes his duties in January 2014.
Day has served as the company’s CEO since 2008 and announced her intention to resign in June 2013, following a challenging year for the company which included a recall of its signature black pants because they were too sheer. She is expected to remain with Lululemon through the end of the company’s fiscal year to ensure a smooth transition.