Lululemon 4Q13 Earnings Call Notes

A digest of some of the top insights that I’ve gathered from this week’s earnings calls.  Full notes can be found here.

Even LULU saw comp decline at its brick and mortar

“Direct to consumer sales, which increased by 24.9%, or $19.5 million, offset by comparable store sales decline of 2% on a constant dollar basis. And on a combined basis, including both physical stores and ecommerce, our total cost increased 4% on a constant dollar basis.”

20% unit growth, 7% sales growth

“We ended the year with 254 total stores versus 211 a year ago. There are 199 stores in our comp base, 39 of those in Canada, 129 in the United States, 23 in Australia”

“For the fourth quarter, total net revenue rose 7.3% to $521 million, from $485.5 million in the fourth quarter of 2012.”

Gross profit basically flat

“Gross profit for the fourth quarter was $278.8 million or 53.5% of net revenue, compared to $274.5 million or 56.5% of net revenue in Q4 2012.”

Guiding full year revenue growth of 11%

“For the full fiscal year 2014, we’re targeting to open up 42 corporate owned stores, including Australia and the U.K. and up to 10 new ivivva stores. We expect our annualized combined comp to be in the low to mid-single digits and therefore project net revenue to be in the range of $1.77 billion to $1.82 billion.”

Investing in understanding guests at a personal level

“I think most of these investments right now are centered around CRM and really sort of creating a seamless experience between online and brick and mortar, and also sort of understanding our guests at a more micro level so that we can have a more personalized experience with them.”

Not the only game in town anymore

“We’re certainly not the only game in town anymore. But as we get back to our roots, we’re really focusing on innovation. I don’t want to spend too much time worrying about our competitors. I certainly want to know what they’re doing. It’s validation of the strength of our market and its global relevance and its growth in every single global market.

But we’re going to get back to what we do best, which is inventing the future, and really focusing on the magic that is very unique to lululemon, which is combining beautiful as well as technical innovation. So certainly something that we are aware of, but something that we’re going to look forward rather than over our shoulder.”

Sticker shock on rent in Hong Kong

“When we look at Hong Kong, I think the reason that we’ve moved more slowly than we’d like is not simply sticker shock on the rent. I think as we move into different regions, we have to be a little bit flexible in terms of what our store looks like in those regions”

Have to create deep local expertise

“value comes with having the local deep expertise that we mentioned earlier. It’s not how is Hong Kong going to adapt to lululemon, but how is lululemon going to adapt to Hong Kong. And that’s going to open a lot of doors to accelerate our international growth”

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