Canadian yogawear maker lululemon athletica inc. (LULU, LLL.TO) said Monday after the markets closed that its first quarter profit rose a modest 1.5% from last year, as higher costs and expenses dented a 21% revenue growth.
However, the company's quarterly earnings per share came in above analysts' expectations as did its quarterly revenue.
At the same time, the company gave an upbeat forecast for the second quarter and raised its full year outlook.
Additionally, lululemon said that its Chief Executive Officer Christine Day will step down after a five and half year tenure.
The company said its board has formed a search committee, and Ms Day will step down once a successor is named.
"Being a part of lululemon for the past five and a half years has been an incredible journey. I am proud of building a world class team that has produced one of the best growth, brand and profit stories in retail," said Ms. Day. "Plans have been laid for the next five years and a vision set for the next ten. Now is the right time to bring in a CEO who will drive the next phase of lululemon's development and growth."
lululemon shares are currently losing 14.94% in after hours trading after closing the day's regular trading session on the Nasdaq at $82.28, up 85 cents or 1.04%. On the TSX, the company's shares closed at C$84.03, up C$1.08 or 1.30%.
For the first quarter ended May 5, the Vancouver, Canada-based company reported net income of $47.3 million or $0.32 per share, compared to $46.6 million or $0.32 per share for the year-ago quarter.
On average, 26 analysts polled by Thomson Reuters expected the company to earn $0.32 per share for the first quarter.
Net revenue for the first quarter rose 21% to $345.78 million from $285.70 million in the same quarter last year. Twenty-five analysts had a consensus revenue estimate of $341.07 million for the first quarter.
The company had forecast net revenues of $333 million to $343 million and earnings of $0.28 to $0.30 per share for the first quarter.
Same-store sales for the first quarter increased by 7% on a constant dollar basis.
The latest quarter results include a provision of $17.5 million for inventories charged to cost of sales related to the pull-back of black luon pants.
In March, lululemon announced a recall of its signature black Luon fabric yoga pants and crops from stores, showrooms and online website following the detection of some fabric quality issues. The incident caused a drop in the company's share price, and Lululemon's Chief Product Officer Sheree Waterson left the company in April.
Gross margin for the first quarter shrank to 49.4% from 55.0% a year earlier, while operating margin narrowed to 19.1% from 25.6% last year.
Looking forward to the second quarter, the company forecasts net revenue of $340 million to $345 million and earnings of $0.33 to $0.35 per share. Analysts currently expect the company to earn $0.33 per share on revenue of $328.88 million for the second quarter.
For the full fiscal 2013, the company now expects net revenue to be in the range of $1.645 billion to $1.665 billion and earnings of $1.96 to $2.01 per share. Previously, the company expected net revenue of $1.615 billion to $1.640 billion and earnings of $1.95 to $1.99 per share.
Analysts currently expect the company to earn $1.99 per share on revenue of $1.64 billion for the full fiscal 2013.
The company also said it has provided written notice to the Toronto Stock Exchange regarding the delisting of its common stock. The company expects its common stock to be delisted from the TSX at the close of trading on June 24. The company's common stock will continue to be listed and trade on Nasdaq.
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