http://www.morningstar.com/earnings/26847489-lululemon-athletica-inc-lulu-q1-2011.aspx

Lululemon Athletica Inc LULU
Q1 2011 Earnings Call Transcript

Transcript Call Date 06/10/2011

Operator: Good day, ladies and gentlemen, and welcome to lululemon athletica Q1 2011 Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. As a reminder, this is being recorded.

I would now like to introduce Mr. Joe Teklits with ICR. You may begin.

Joseph Teklits - ICR: Great. Thank you. Good morning, everyone. Thanks for joining us to discuss lululemon's conference call for first quarter 2011 results. A copy of today's press release is available on the Investor Relations section of the Company's website at www.lululemon.com or furnished on Form 8-K with the SEC available on the Commission's website at www.sec.gov.

Also available in the Investor Relations section of the Company's website will be a recording of today's call, which will be available for 30 days as a replay shortly after the call ends. Hosting the call today is Christine Day, the Company's CEO, and John Currie, the Company's CFO.

First, we would like to remind everyone that statements contained in this conference call which are not historical facts may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results might differ materially from these projected in such statements due to a number of risks and uncertainties, all of which are described in the Company's filings with the SEC.

Now, I'd like to turn the call over to Christine Day.

Christine Day - CEO: Thank you, Joe. Good morning, everyone, and thank you for joining us to discuss our first quarter results. With me today are John Currie, our CFO; Sheree Waterson, our EVP, General Merchandise Management and Sourcing Executive; Delaney Schweitzer, our EVP, Retail Operations, and Chris Ladd, our Head of Global e-Commerce. Following my opening remarks, I will turn the call over to Chris, and then John will go through the financial details for the quarter.

We are again very pleased with our start to fiscal year 2011. Given our inventory constraints combined with our focus on transitioning our e-commerce platform, we approached the plan for the first quarter conservatively. However, thanks to our strong partnerships with our manufacturers, we were able to source additional inventory for April and maximize the productivity of the inventory we had to work with, both in sales and gross profit dollars. Although we had a few bumps in the road given the complexity of the e-commerce project, for the most part, we saw a relatively smooth transition to our platform, thanks in a big way to our new CIO, Kathryn Henry, and our e-commerce team.

It took a little longer than expected to merchandise our online catalogue by about two weeks, but we are now to a point where our online store is matching our retail stores about as much as we want it to.

Our online store inventory will be in a good position to support a strong back half of the year. So, while we planned e-commerce down as a percentage of revenue through the transition, we already see it climbing back towards a 10% run rate and expect to be close to 10% of total revenue for the full year.

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