Lululemon 4Q16 Earnings Call Notes

Laurent Potdevin – Chief Executive Officer

Slowing sales due to merch issues

“The slowing sales trend early Q1 has most acutely impacted eCommerce. We have clearly identified the issues, an assortment lacking depth and color for spring compounded with visual merchandising that did not powerfully translate our design vision. With focused urgency our teams have been cross correcting the issues, with early indications reflecting an immediate and positive impact on performance. We will see more color in selected style as early as next week.”

Celeste Burgoyne

Co-located and locals

“So as we’ve spoken about with our real estate strategy, co-located and locals, both continue to be something that we see as really exciting opportunities from 2016 and into 2017 in areas we’re focusing really hard on and they both allow us to really capture traffic in the most relevant ways for those communities. Co-located, expanding our square footage, for example, Mall of America and Somerset, two key U.S. co-located stores in 2016, we’ve driven more traffic in those locations and have grown the Men’s business in particular from 50% to 70% through more dedicated square footage. And then locals has also allowed us to go into smaller communities in a really locally relevant way and the results have been something we’re really proud of. Bend, Oregon and Fort Collins also, for example, have been two of the four that we’re really excited about and we’ll continue to really put into that strategy into 2017.”

Lululemon 1Q16 Earnings Call Notes

lululemon athletica’s (LULU) CEO Laurent Potdevin on Q1 2016 Results – Earnings Call Transcript

Revenue +19%

While store traffic comps wasn’t as strong in Q1 as in Q4, we delivered a total revenue increase on a constant currency basis of 19%, driven by an 8% combined comp, the result of continued positive comps in our stores and e-commerce growth in the high teens.

Sponsoring Canadian beach volleyball team

This summer will mark the first Olympic Games where lululemon has partnered with Canada’s beach volleyball team, to create one of a kind equipment designed specifically for them. The custom gear was developed with real-time feedback from the athletes of the Canadian women’s and men’s Beach Volleyball Team. Rigorous testing on-court and in-house at lululemon’s white [ph] space, resulted in the ultimate designs that will allow the athletes to perform at their best, without distraction, while looking fantastic.

Square footage growth of 18%

in Q1, we opened two new lululemon stores along with six new ivivva locations. This supported our total square footage growth in Q1 of 18%, keeping pace throughout our 12% annual goal.

Stuart Haselden

Ecom penetration was flat but no red flags

Hey Sharon, it’s Stuart. So yeah, the e-comm growth, still double digits, high teens. We are not going to feel bad about that. It is a little lower than what we have seen last year. We feel like the penetration has the potential to go well above 20%; easily could reach 25% to 30%, I think we talked about that in our five year goals. I would expect, as the digital team is able to ramp up the full impact of our full web site, as we are able to bring online, particularly in the second half of the year, the full capabilities of our CRM efforts. We are going to see healthy trends in that e-comm sales trends, and would expect penetrations to increase over time. And so, we are not seeing any red flags per se, in the Q1 results.

Traffic trends improved in last couple of weeks

the traffic was softer in the first quarter versus what we saw in Q4, and it was softer late in the quarter as well, and that persisted in the first couple of weeks of May, in Q2. We have seen the traffic trends improve in the last couple of weeks.

Miscellaneous Earnings Call Notes 12.11.15

Universal Health Services (UHS) Presents at Bank of America Merrill Lynch 2015 Leveraged Finance Brokers Conference

Steve Filton

Behavioral health business is more recession resistant

“if you’re seeking — and you’re seeking acute care treatment, you need a hip implant or you need some sort of ENT surgery et cetera, you may think about the economics of that; you may choose to postpone that because you don’t want to come out of pocket for a co-pay or deductable or because you don’t want to be out of work frankly during a tough economic climate. But if you try to commit suicide or you overdose on drugs and alcohol, you are not going to be in a position to decide whether you should or shouldn’t be admitted to the hospital. That decision is really being made generally by somebody else who is effectively economically insensitive to what your economics of the situation or concerns might be. So, I think that’s another reason why the behavioral business has generally proved to be more, I’ll call it, recession resistant.”

Optimum occupancy in behavioral care is in the low to mid 70s

“occupancy rates and our behavioral facility peaks in the mid 80s, right around 84% in about 2005-2006. What we started to do at that point because we have a view probably the ideal occupancy rate in this business is somewhere in the low to mid 70s. And so, when we were at 85% in about 10 years ago, we’re turning away a lot of patients at that point because obviously if we’re averaging 85%, it means that there’s a lot of days when we’re at 90 and 95 and even a 100% occupancy. It also means that because of some of the constraints that we have, we have put male and female patients; we don’t put adults and children together, we don’t certain diagnoses together. So, as a consequence, it’s difficult for facilities to really run at something close to full occupancy.”


Silicon Laboratories Presents at Credit Suisse Technology, Media & Telecom Conference

Tyson Tuttle

Low power for IoT requires innovation

“if you look at the energy efficiency that’s required. If you’re handset only has 10% battery life left, and I know that when mind says 10% battery life, I’m like looking for a charger. But if you imagine that amount of power needs to power an IoT device for five years. So that’s essentially the amount of energy that’s in the little coin cell and they want that device to sense the environment. Let’s say every few minutes it needs to communicate that when something happens. This type of energy consumption requires a lot of innovation. And if so this is what we are focused on doing.”

From a macro perspective, wireless markets suffering but infrastructure business doing well

“I think a lot of people that we are selling into wireless were suffering, especially in China, we were not exposed to that at least on our infrastructure business, we had a little bit of exposure on the microcontroller side and some of the optical modules that did hold back our growth in IoT in the second half. But on infrastructure we see that it’s pretty solid globally. And this is more of a reflection of core network in data center roll outs.”


Barnes & Noble’s (BKS) CEO Ronald Boire on Q2 2016 Results

Have seen increased traffic so far in Q3

“the challenges were greater than anticipated and reduced traffic as well as conversion. During the second quarter, we implemented a significant number of website fixes to increase traffic, improve the overall user experience and stabilize the site. So far during Q3, we have seen increased traffic and have stabilized the site for the holiday season. We plan to implement additional improvements after the holiday season to further upgrade the overall user experience.”


The Cooper Companies’ (COO) CEO Bob Weiss on Q4 2015 Results

Had a bumpy ride from mid September through the end of November

“August was a good month and things dropped off in October a lot, particularly in the U.S. and some of the problems we ran into in Europe exacerbated the most. We thought we’re in pretty good shape in early September, found out we weren’t in as good shape as we thought by mid-September and had a bumpy ride with our integration if you will in Europe, from mid September until pretty much the end of November. Having said that, we had what we call a very respectable November”


Toronto-Dominion Bank’s (TD) CEO Bharat Masrani On Q4 2015 Results

Mark Chauvin

Are starting to see stress in consumer credit portfolios in energy-impacted provinces, but within expectations

“Next, with respect to our oil and gas exposure, we were not surprised by the level of impaired loan formations this quarter. Ongoing analysis indicates that the oil and gas nonretail credit portfolio continues to perform within expectations, given the current level in near-term outlook for commodity prices in this sector. We are beginning to see signs of deterioration in the oil impacted provinces consumer credit portfolios, which again are well within our earlier expectations. Based on ongoing stress tests conducted against the credit portfolios, I remain comfortable that the potential impact of low energy prices on the bank’s credit losses remains well within the range of a 5% to 10% increase over 2015 levels.”

Seeing a gradual increase in delinquency rates over last 4-5 months in oil impacted provinces

“we have been watching it very closely, especially the impacted provinces, which would be Alberta, Saskatchewan and Newfoundland. And what we are seeing in two categories, being the indirect auto but the non-prime segment primarily and then in the card segment, we have seen a gradual increase in delinquency rates over the last four or five months.”

Customers affected are early indicator, the type of customer that would be more challenged than the typical customer

“So in many respects we look at that as an early indicator because that would be the customer that maybe would be more challenged than the typical customer. Now, I would stress that these two categories are less than 1% of our total book and that we expected to see losses of this level.”


Sprint’s (S) Management Presents at Bank of America Merrill Lynch Leveraged Finance Brokers Conference

Tarek Robbiati — CFO

Wireless data is much cheaper in some other markets than the US

” I think the – look at the U.S. wireless market, it’s the biggest one in the world by value. And the reason why it is the biggest one in the world by value is because we have 300 million people and you have a very, very high ARPU…when you really look at some of their – the size of their bills, it’s quite extraordinary. I mean you compare this with Hong Kong which is a market that I am very familiar with. In Hong Kong you can get very, very decent data packages on 4G networks for less than $5 postpaid, which is quite extraordinary.”


Comcast’s (CMCSA) Management Presents at UBS Global Media and Communications Conference

Mike Cavanagh–CFO

No new comments on wireless plans. We believe the cheapest way to transmit data is to get it to the hardwire as soon as possible

“we have no news on this topic today. What we have decided is that it’s certainly worth at this point triggering the MVNOs that we can work on exploring what kind of offering we could bring and go deeper to learn and experiment. That’s the state of play on the MVNO. And that sits in the context of having been big believers in WiFi. So, you have seen us invest in and continue to invest in the WiFi as an extension of the value of the broadband pipe, which is still the kind of best and cheapest way to transmit data we believe is to get it to the hardwire as soon as possible. So, with the progress we have made on our WiFi product and broadband, we think it makes complete sense to be exploring on – what possibilities the MVNO offering has to add value to our customer relationships. That’s as much as we know. There is no – it will take time to draw any conclusions from what we are now going through.”


Vail Resorts’ (MTN) CEO Robert Katz on Q1 2016 Results

Our labor markets are tight

“think ensuring that we have enough, ensuring that we are providing the right employee experience, attracting enough of the right labor, retaining labor and then a part of that is obviously being able to have housing for everyone that works here, I think it is probably our number one concern right now in terms of ensuring that we can continue to drive success. And so, I mean that’s led us over the last couple of years to continue to invest to make sure that we can do that. I’d say where we feel right now is that our markets are tight. We think it is a challenge.’

Upper income US remained strong

“Colorado in particular is the strong market, continues to be a strong market given the economy here, Utah, the Bay Area and California so that obviously is the big help right there but then I would say we are seeing pretty broad based strength from all of our major destinations across the United States, I would say even places like Los Angeles, like Seattle which are not typically our strongest markets in terms of size, we’re seeing real strength there too”…

“I would say right now I think the domestic, the U.S. economy on the domestic side is very strong, the upper income portion of that remained strong ‘


AutoZone’s (AZO) CEO Bill Rhodes on Q1 2016 Results

DIY auto spending has benefitted from lower gas prices

“I think clearly we are seeing some industry strength currently. I think a part of that has to do with what’s going on with gas prices. And while gas prices initially went down, you didn’t see the initial correlation with miles driven increasing. But in more recent months, starting really strong in this summer, and continuing through September, the latest date that we have available, it’s showing nice strength. Over long periods of time we’ve seen that has a nice correlation with our DIY industry growth.”


Cisco Systems (CSCO) Presents at Barclays Global Technology Brokers Conference

Hilton Romanski

Customers are looking for a hybrid cloud

“what we’re hearing from customers fundamentally is that they want to see the benefits and the economics of public cloud in their private cloud environment. So that would suggest to us that ultimately there is a hybrid cloud solution out there for enterprises where some of those benefits across multiple types of workloads across their own environments that are private as well as those that are being hosted in a public cloud is going to co-exist.”


Dave & Buster’s (PLAY) CEO Steve King on Q3 2015 Results

Couldn’t be happier with how 2015 is shaping up

“we couldn’t be happier in terms of how 2015 is shaping up, while we’ve achieved so far as we look forward to a strong finish in the fourth quarter.”


Halliburton’s (HAL) Management Presents at Wells Fargo 2015 Energy Symposium Brokers Conference

Christian Garcia — Interim CFO

North America looks like it could be marginally better than expected, but international looks marginally worse

“North America does look like it’s going to be marginally better than what we said in the third quarter call and international looks like it’s marginally worse and in total, we’re in line with our expectations as we left the third quarter.”

2016 is clearly going to be another down year but we don’t know the magnitude yet

“2016 is still opaque. E&P the E&Ps have not announced their budgets, but clearly it’s going to be another down year. The question is the magnitude of the decline.”

Argentina had elections that could lead to positive economic reforms

“Argentina just had elections and we think that new president elect will usher in a new era of economic reforms achieved among that would be probably a potential depreciation of their over valid currency which will in the short term provide some little need to some dislocations but I think in the long term would be actually help that economy boot that economy and would invite for investors.'”


HCA’s Management Presents at Opperheimer 26th Annual Healthcare Broker Conference

Bill Rutherford, Chief Financial Officer

Seeing higher turnover of nurses as demand for nurses strong

“We think you know we are seeing higher turnover of recently than we’ve historically had. And we think there is a lot of other supply in the marketplace and demand for nurses. We’ve got a host of efforts around recruiting. We talked about on our call our efforts to hire nurse graduates and putting them in orientation and onboarding them a little bit differently so that they have — the retention is longer for those new nurses.”

See continued strong economies in the majority of our markets

“We see continued strong economies in the majority of our markets and I think that provides really fundamental momentum for the company and those trends don’t appear quickly, nor do they disappear quickly. So, we are optimistic that our market trends, we are seeing has some durability to it in the future.”


Comerica’s (CMA) CEO Ralph Babb on Goldman Sachs U.S. Financial Services Brokers Conference

Energy reserves at 3% of total energy related loans

“if prices remain low for longer, we expect to see continued negative credit migration and losses to emerge yet we believe they will be manageable. We have increased our reserves for energy loans in each of the past four quarters, as a result of an increase in criticized loans and sustained low energy prices. Because investors have been particularly interested in the size of our energy reserve allocation note that at the end of the third quarter, we had reserves amounting to more than 3% of our total energy and energy related loans.”


U.S. Bancorp (USB) Presents at Goldman Sachs US Financial Services Brokers Conference

CFO, Kathy Rogers

Planning for three interest rate increases in the next 12 months including next week

“as we look out into 2016, I do think that we are seeing an economic environment that is somewhat similar to what we saw this year, may be slightly improved. As we think about the interest environment, we are projecting in our plan, a potential for two interest rate hikes next year, and then December 1 of this year; so a total of three if you look out over the course of the next 12 months.”

Not seeing any deterioration of credit outside of energy

“the simple answer is no. We’re really not. Outside of energy, it’s really relatively benign, no significant change.”

We’ve probably gotten to a point where reserves will start building again (but not necessarily because of credit deterioration)

“I think one of the things that you’re going to see is that we are getting to that point in the cycle where many banks, including ourselves, have enjoyed a nice outcome of reserve releases. And I do think we’re coming to the end of the cycle. And I think that you’ll start to see reserves starting to build as we move out into later quarters.”


Lululemon Athletica’s (LULU) Laurent Potdevin on Q3 2015 Results

Start of Q4 has been mixed

“In line with macroeconomic trends, the start of Q4 has been mixed. We saw lower traffic in the final weeks of Q3 and into the first couple of weeks of Q4, with steady improvement in Thanksgiving. Given the current environment, we’re taking a conservative stance with revenue in Q4, while taking the necessary actions to manage inventory and control expenses.”


Moody (MCO) Barclays Global Technology, Media and Telecommunications Conference

Mark Almeida, who is the Head of the Moody’s Analytics Business

November was a good month from an issuance standpoint and December has gotten off to a strong start as well

“November was a good month from an issuance standpoint, and December has gotten off to a pretty good start as well. So I think things have firmed up a bit, since some of the weakness that we saw in the summer time.”


Korn-Ferry’s (KFY) CEO Gary Burnison on Q2 2016 Results

Even in a digital world, it still pays to have people housed in the same location

“I think that creating connectivity of people and clients in an environment of collaboration is incredibly important and although we live in a virtual world, I fundamentally believe that the people need, to the extent possible, need to be housed in the same location.”

Gregg Kvochak

“global demand for our Executive Recruitment services remained strong in the second quarter.”


McGraw-Hill Companies’ (MHFI) CEO Doug Peterson Presents at Goldman Sachs U.S. Financial Services Conference

Issuance is down 30% year to date

“we’ve seen a choppier market, issuance is down during the quarter and year to date overall issuance is down globally about 28% and in the quarter its down again over 30%, 35%, 37%, depending on which element of the markets that you look at. So we’ve seen some volatility in the ratings business.”


Avnet (AVT) Presents at Raymond James Technology & Communications Investors Brokers Conference

Kevin Moriarty, CFO

Our product is service

“Avnet’s product is, our product is service, has been and always will be. Models change the way we get compensated for that service. We need to continue to be nimble and agile to be able to move with that”

We feel pretty good about the environment

“I would characterize the current lead times as stable, short. We haven’t really seen any significant changes in push outs, cancelation rates. So we feel pretty good. EM, we continue to experience growth within our European business. I would characterize the Americas as sluggish overall on the component side.”


ConocoPhillips’s (COP) CEO Ryan Lance on 2016 Capital Budget and Operating Plan

We see dividend as highest priority

“Despite the tough market, our dividend remains the highest priority use of our cash. We view the dividend level as a long-term decision. And we’ve been in the current low price cycle for relatively short period of time”

Capital budget down ~25% from last year, -54% from 2014

“We’re announcing a 2016 capital budget of $7.7 billion that’s $2.5 billion lower than 2015 capital guidance and more than $9 billion lower versus 2014. In setting our budget, we’re flexing capital down appropriately for the price environment without losing opportunities or sacrificing the safety or integrity of our operations.”

Andrew Sohn Notes: OXM, LULU, MWH

Andrew Sohn, a junior at Columbia University, has started to contribute to Avondale’s company notes database. Below are quotes from some of the calls that Andrew has read this week.

 

 

OXM

Thomas Chubb – CEO

eCommerce continues to take on a greater role, and still has a lot of runway left in terms of growth

For Lilly, eCommerce makes up 28% of net sales a very significant online business. Lilly took another big step forward last week with the launch of its mobile app, which gives our customers a fantastic way to shop, share and learn more about Lilly…So as we’re developing those growth plans, we’re putting a pretty high priority on not the store count growth but eCommerce growth.

Despite first quarter macro economic headwinds, some retailers were still able to have a fruitful quarter

Well the short answer is this spring we’re sort of seeing an uptick in all of our business. So all parts of the country, so while we have seen stronger business in some of the areas where we don’t have a physical presence, we’ve also seen uplift in the areas where we do have a physical presence and we have clearly brought some new customers into the brand, but we’ve also reengaged old customers, who maybe hadn’t seen us in a while and excited existing customers and compelled them to come back for additional visits and additional purchases.

Terry Pillow -CEO

This year’s later father’s day date may change the seasonal patterns of some reatailers

As always, a strong Father’s Day is key to our second quarter results. This year Father’s Day is not until June 21, so we still have a lot important selling days ahead of us. Tommy Bahama is the go to brand for Father’s Day and we are excited about our plans on this very important holiday for our business. We’ve got a strong marketing campaign with a fantastic gift guide included in our summer mailer.

 

 

 

 

 

 

LULU

Stuart Haselden – CFO

Again, eCommerce gained an even greater importance due to the headwinds that retailers faced like the strike at the ports, and bad weather

We were very pleased with the e-com sales growth that we saw in Q1. I’d say, there’s a couple of factors we’d point to. Certainly, weather was an issue in the early part of Q1 which likely benefited the e-commerce results. I’d also say that we began the quarter in e-commerce with a stronger inventory position and we were able to accelerate or able to flow, I should say, inventory to the e-commerce business faster than we could the stores. There’s an additional step in the supply chain for getting the inventory from our distribution centers to our stores, which takes a little bit of time that in e-commerce you don’t have that step. So, we’re able to have a better inventory position in e-commerce which I think drove the upside. And from – the comp guidance that we gave for Q2 certainly reflects an ongoing strength in our e-commerce business as well as the improvement in the store comps.

 

 

 

 

 

 

MWH

Douglas Scott Ewert, CEO

The retail market for weddings is likely to shrink in the foreseeable future

The strength in the retail business was more than enough to offset moderate weakness in the rental business which comped down 1.2% in the quarter, resulting in the overall 6.8% comp increase at Men’s Wearhouse. We believe there are macro wedding trends influencing these results. There are indicators that the overall wedding business is slowly shrinking due to shift in cultural attitudes towards traditional weddings. The U.S. marriage forecast published by Demographic Intelligence reports the number of weddings have been on a slow decline since 2008 and projected to continue to contract through 2016. Additionally, we’re seeing an increase in the number of wedding groups who elect to purchase retail outfits as an alternative to renting. We believe this is a function of a movement towards more casual and destination weddings, and our focused offerings on popular wedding rental – wedding retail styles.

Douglas Scott Ewert, CEO

Men’s Wearhouse attempting to target millennial markets via greater eCommerce presence and a partnership with Macy’s

Yesterday, we announced two new partnerships that will further our relevance and opportunity with millennial age customers. The first is with Macy’s where we’ll provide rental services inside 300 top Macy’s stores by the end of 2016. We see opportunity to further our market share gains by leveraging off of Macy’s strong customer traffic in store and online as well as their wedding registry service. These shops will be located in the men’s department, staffed with our knowledgeable formal wear consultants, and powered by our robust systems and extensive inventory that will be supplemented with exclusive styles for the Macy’s customer. From a real estate perspective, we believe there will be opportunity to shift a large amount of our mall-based rental business into Macy’s shops, which creates further economic leverage.

Lululemon 4Q14 Earnings Call Notes

350 store target in NA

“We continue to see significant demand across all geographies. From a store standpoint, we believe our long term goal of 350 stores in North America will allow us to have the right footprint without oversaturation. In addition to our established showroom model, we’re innovating and investing in different store formats that will vary in size and assortment. It is critical to note that we expect these alternative store formats to achieve a comparable level of four-wall profitability compared to the rest of our fleet after initial ramp-up is completed.”

Working with global ambassadors

“Working with our global ambassadors and educators, we aim to inspire, educate, connect and converse with our guests.”

“This ambassador-driven campaign launched alongside a news stream capsule illustrates how our brand is most powerful when our stories are inspired and generated by our local communities and our local heroes. And as I mentioned, our brand operating model comprised of product, guest experience and brand and community will be leveraged in an omnichannel manner across diverse geographies to achieve our growth targets.”

Founder stepped down from the board

“Before we begin our Q&A session, we would be remiss not to acknowledge the immense contribution of our founder, Chip Wilson, who stepped down from our Board last month. It goes without saying that we would not be here today discussing this tremendous business were it not for his vision back in 1998.”

New CFO too

“So it’s exciting to be here. I think that the business has incredible momentum. The investments that the company has been making over the last year seem to be putting the company on track for some explosive growth into the future. ‘

Continued to see strong traffic

“So on your traffic question, so we have continued to see strong traffic into Q1. So the traffic acceleration that we saw late in 2014 has continued into Q1. Conversion has improved sequentially. It has still been a headwind for us. We have seen some slight improvement in AUR as well, so we’re encouraged by the traffic and we look to that as an indicator of that. The momentum that we had in the fourth quarter is in fact extending into Q1 and we’re working through the inventory issues, as you mentioned which is really the bigger headwind for us currently. We feel the inventory will begin to rebalance likely in Q2 and the flows will hopefully more normalize into the second half of the year.”

Competition is a function of the strength of our markets

“I’ve answered that question many, many times. I think the overall market globally is growing and the strength and the number of competitors really validates the long term growth and size of the market, but we either compete against everybody or we compete against nobody. We own the market that we created and we have second to none products and guest experience and our vertical model really allows us to create experiences that are unique.”

LuluLemon 1Q14 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.

4% comp decline for brick and mortar

“Now on to our first quarter results. For Q1, total net revenue rose 11.2%, to $384.6 million, from $345.8 million in the first quarter of 2013. The increase in revenue was driven by total comparable sales growth on a combined basis including e-commerce of 1% on a constant dollar basis comprised of 25% growth online and a bricks and mortar stores sales decline of 4%, all on a constant dollar basis.”

Inventory grew faster than sales

“Inventory at the end of the first quarter was a 177.4 million or 23.4% higher than at the end of the first quarter of 2013. Similar to last quarter this is higher than optimal due primarily to a higher composition of core inventory.”

CFO retirement reasons

“it’s been long been a part of my goal to expand my involvement serving on corporate and non-profit boards. And for those of you who know me really well, you know that my long standing goal has been to ski each season the number of days equal to my age. Since I turn 60 next year and these goals are difficult to achieve with a day job, I’ve decided that this is the time to announce my retirement plans.”

People are coming in but conversion is down

“It’s hard to dissect the comp only a few weeks into the quarter. But actually what we’re seeing is traffic a little bit stronger which is very encouraging but conversion down which makes sense with a non-ideal product assortment so means it’s telling us that we’re maintaining the guest coming in and when the product is right that should deliver a rebound but in the back half. ‘

Our parents are fighting and it’s awkward

“I think you know we’re not commenting on the Board, but you know meeting with the company yesterday we sort of mentioned that our parents are fighting and it’s awkward. But both Chief and the rest of the Board fully support the management team and what we’re doing, so we are staying focused and we are not going to let us be distracted and so I think we are in very good shape there.”

We really don’t use a lot of data….

“We’ve actually never used a lot of data in the history of lululemon and we are shifting that as quickly as possible, I mean we’ve got a very loyal guest and we should know a lot more about him or her, and it is part of our CRM effort. So, we are investing heavily both from a talent standpoint and from a technology standpoint to really ramp that up. And it’s a little bit of a curse and blessing, the curse being that we don’t have a lot of data right now, the blessing being that we can build a system that will really sort of take us in the future and that’s what we’re building. So it is part of the plan and we’re in the process of building it.”

The problem is with the core product

“we have a core product assortment that has not been evolved as quickly as it should have been and we’re diligently working away at that. We didn’t have enough depth on our seasonal product in Q1, our balances were heavily weighted towards core and less on the seasonal, so we’re getting that rebalanced, back in line and it’ll be running more where it was running in 2012 by the time we get back into Q3 and Q4, I think there’s been a real lack of cohesive merchandizing stories and our store really telling those products stories in a really clear and concise way to lots of opportunity there specifically as we move into ’16.”

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”