Lululemon Sales Beat Estimates as New Products Draw Customers

VANCOUVER, Canada — Lululemon Athletica Inc. posted first-quarter sales that topped analysts' estimates, helped by new products like an expanded selection of women's tops.

Sales rose 17 percent to $495.5 million in the quarter ended May 1, the Vancouver-based company said in a statement Wednesday. Analysts projected $487.6 million, on average.

The results signal that Lululemon's new merchandise is gaining traction. The yogawear retailer has been adding more innovative pants and fabrics that will appeal both to hardcore athletes and casual buyers. Chief executive officer Laurent Potdevin also has focused on efficiency to improve results. Those efforts helped Lululemon report a gross margin of 48.3 percent in the quarter, wider than the 47 percent analysts had estimated.

“In terms of the key metrics we were looking for in the quarter, we got everything we wanted, and then some,” Howard Tubin, an analyst at Guggenheim Securities, said in a note. “Lululemon’s merchandise assortment is resonating with shoppers.”

The shares rose 1.5 percent to $69.18 at 8:18 a.m. in early trading in New York. Lululemon already had gained 30 percent this year through Tuesday.

However, challenges remain. Lululemon is facing increased competition from upstart brands as well as larger rivals like Nike Inc. and Under Armour Inc. The larger retail environment also has been turbulent as consumers restrain spending amid an uncertain economy.

Profit Miss

First-quarter profit was 30 cents a share, excluding some items. That missed analysts’ 31-cent average projection. The company forecast that second-quarter profit will be 36 cents to 38 cents. Analysts estimated 39 cents, on average.

The retailer also is fending off criticism from its founder, Chip Wilson, who says the company lacks a clear strategy. In an open letter to investors last week, he slammed the chain for losing ground to competitors like Nike and Under Armour. Wilson said he remains the largest Lululemon owner with a stake of almost 14.2 percent.

Lululemon responded that it has posted a “strong operational performance” and that it is focused on customers.

By Lindsey Rupp; editors: Nick Turner and Kevin Orland.