http://www.morningstar.com/earnings/50051364-lululemon-athletica-inc-lulu-q4-2012.aspx

Lululemon Athletica Inc LULU
Q4 2012 Earnings Call Transcript

Transcript Call Date 03/21/2013

Operator: Good day, ladies and gentlemen, and welcome to the lululemon athletica Q4 2012 Results. 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, today's conference call is being recorded.

I'd now like to introduce your host for today's conference, Mr. Joe Teklits of ICR. Please go ahead.

Joseph Teklits - IR, ICR Inc.: Thanks, good morning. Thanks for joining us for our fourth quarter and fiscal 2012 conference call. A copy of today's press release is available in the Investor Relations section of our website at lululemon.com or furnished on Form 8-K with the SEC and available on the Commission's website at sec.gov.

Shortly after we end this morning, a recording of today's call will be available on our website as replay for 30 days. Hosting our call today is Christine Day, the Company's CEO and John Currie, the Company's CFO. Sheree Waterson, our Chief Product Officer will also be available during the Q&A portion of the call.

As a reminder, the 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 the Company's filings with the SEC. We have about one hour for today's call, so when we get to the Q&A, please limit yourself to one question at a time to give others the opportunity to also have their questions addressed.

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

Christine Day - CEO: Thank you, Joe. Good morning. I am joining you from Australia today, where it is actually just after midnight. Our Board meeting was held here this quarter, and we have just finished a few days of meeting with our Board and our team here in Australia.

Before we talk about our fourth quarter and full year 2012 results, I will give you an update to the announcement made on Monday of this week, regarding the sheerness in certain styles of our women’s black Luon bottom.

Following my comments, John will speak to our guidance. We have not yet determined the specific cause for the sheerness and are pursuing several hypotheses in parallel with our manufacturing partners to determine the root cause. What is clear to us is that this is not the Luon that we and our guest have come to love. The process for creating Luon is complex and involves a specific set of proprietary ingredients and a multi-step production process. Even the slight changes to the process can create meaningful changes in the fabric.

We had already begun putting more stringent specifications in place in the production of Luon and we will be redoubling our efforts in this area. We currently have a dedicated team working with our suppliers to identify and resolve the issue. We have recently added strong leadership in quality control, our (lays on office) and our commercialization and development teams, and expect these people and other investments to solidify our quality consistency and deliver capabilities.

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