Lululemon raises full-year profit, revenue forecast

[June 09, 2015]  (Reuters) - Lululemon Athletica Inc raised its full-year revenue and earnings forecast, the latest sign that the Canadian yogawear retailer was recovering from the turmoil caused by an embarrassing recall of overly sheer yoga pants in 2013.

The company also reported a better-than-expected profit for at least the eight straight quarter, helping send its shares up 3.4 percent to $63.61 in premarket trading on Tuesday.

Lululemon is in the midst of a turnaround to improve quality, expand its product line and solve supply-chain problems, while laying the groundwork for faster international growth.

The company has also been trying to grow its men's apparel business in sync with its women's apparel business, while making the range more fashionable.

"Clearly the turnaround efforts are working," said Dorothy Lakner of Topeka Capital Markets.

The company raised its full-year earnings forecast to $1.86 to $1.91 per share from $1.85 to $1.90 and revenue forecast to $2.0-$2.05 billion from $1.97-$2.02 billion.

The profit forecast, however, was short of analysts' average estimate of $1.93 per share, while the revenue forecast compared with analysts' average estimate of $2.02 billion, according to Thomson Reuters I/B/E/S.

"They are giving relatively conservative guidance, likely so they can beat it again," Lakner said. "It's still early in the year, so there is no reason to raise the bar too high."

Lululemon's total comparable store sales rose 6 percent on a constant dollar basis in the first quarter ended May 3 compared with a 1 percent increase a year earlier.

Profit rose to $47.8 million, or 34 cents per share, from $18.98 million, or 13 cents per share. Revenue rose about 10 percent to $423.5 million.

Analysts on average were expecting a profit of 33 cents per share on revenue of $418.9 million.

Up to Monday's close, Lululemon shares had risen more than 10 percent this year on the Nasdaq.

(Reporting by Solarina Ho in Toronto and Amrutha Gayathri in Bengaluru; Editing by Ted Kerr and Savio D'Souza)

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