Lululemon Athletica Inc LULU
Q3 2011 Earnings Call Transcript

Transcript Call Date 12/01/2011

Operator: Good day, ladies and gentlemen, and welcome to the lululemon athletica Quarter Three 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 follow at that time. As a reminder, this conference call is being recorded.

I would now like to turn your conference over to your host for today Mr. Joe Teklits. Sir, you may begin.

Joseph Teklits - ICR: Okay, thanks, and good morning everybody. Thanks for joining us for the third quarter conference call. A copy of today's press release is available in the Investor Relations section of lululemon's website at or furnished on Form 8-K with the SEC and available on the Commission's website at Also available in the Investor Relations section of the Company's website will be a recording of today's call which is available for 30 days as a replay shortly after we end today.

Hosting our call today is Christine Day, the Company's CEO; and John Currie, the Company's CFO. We would like to remind everyone of course that statements contained on this 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 those projected in such statements due to a number of risks and uncertainties, all of which are described in Company's filings with the SEC. Also, today's call we've got a limit of one hour, so when we get to the Q&A, please limit yourself to one question and one primary question.

With that, I'll turn over to Christine Day.

Christine Day - CEO: Thank you, Joe. Good morning, everyone and thank you for joining us to discuss our third quarter results. Today, we're doing our call from New York City and with me is John Currie, our CFO and Sheree Waterson our Chief Product Officer. Following my opening remarks, I will turn the call over to John Currie to review the financial details for the quarter and our outlook for the fourth quarter.

In the third quarter we achieved 31% revenue growth with 50% year-over-year EPS growth and we set a new record in comparable sales per square foot of $1,880. These strong revenue results were at the top end of our guidance and as anticipated, we also had unmet sales demand throughout the quarter.

Our new stores continued their strong performance, and we also bought back our last remaining franchises in Colorado and Santa Barbara. Our goal for Q4 was to break the inventory cycle we ran all year and we have achieved it.

As you will remember in Q4 of 2010, we were well positioned in inventory to meet demand which drove the 28% comp. This was a great result for 2010, but is left as under inventoried and began the cycle of chase.

In Q4 2011, we have the right mix of new styles and color and a healthy and clean inventory. New product highlights for Q4 include new running (move on), polar fleece, featherweight down layering pieces, a dance capsule and bright colors. To set Q4 and Q1 up for success, our Q3 in-transit inventory includes two modules. We brought forward a portion of the spring deliveries built around back to studio marathon training, cycling, commuter themes along with our black and white capsule.

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