Lululemon Athletica's sales growth accelerated last quarter, giving investors confidence that the retailer can maintain its trajectory while it looks for a new top executive.
The yoga-wear maker posted comparable-sales growth of 19 per cent in the first-quarter ended April 29, outpacing the 12.2 per cent estimate from analysts. Operating margins widened as well, pushing the shares up as much as 10 per cent on Friday – the biggest intraday gain in two months.
Lululemon is navigating a competitive sportswear market while looking for a chief executive to take over from Laurent Potdevin, who departed in February after the company said he behaved unprofessionally. The results show the retailer is holding its own against traditional industry rivals such Nike and newcomers such as Amazon.com. Lululemon's key to success is to continue to find hits with new products and expand in Asia while maintaining market share in North America.
The company’s growth last quarter was “no easy feat and a direct reflection of accelerated innovation, execution of technology related initiatives, high product acceptance and the strength of the brand,” Roxanne Meyer, an analyst at MKM Partners, said in a research note.
Excluding some items, profit was 55 cents a share last quarter, topping analysts’ average estimate of 46 cents. Sales were $649.7 million exceeding the projection of $617.7m.
Chairman Glenn Murphy, who was formerly chief executive of Gap, is temporarily leading the company in the wake of Potdevin’s departure - an abrupt exit that was related to a relationship he had with an employee, people familiar with the matter said in February. The resignation was not related to the company’s finances or operations.
Vancouver-based Lululemon has interviewed a number of candidates for the post and will discuss them with the full board next week, Mr Murphy said on a conference call. “I think we can now take this search to the next step,” he said.