Reuters: Global Markets: Lululemon profit jumps but margins tighten

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Lululemon profit jumps but margins tighten Mar 22nd 2012, 12:26 By Allison Martell Thu Mar 22, 2012 8:26am EDT (Reuters) - Lululemon Athletica Inc (LLL.TO) reported a surge in quarterly profit on Thursday as sales in its established yogawear shops jumped, but profit margins narrowed and inventory grew, sending its shares lower. Gross profit margin fell to 56.3 percent from 58.5 percent the year earlier, and inventory at the end of the quarter rose to $104.1 million up from $57.5 million a year earlier. The Vancouver-based chain's typically volatile stock fell 2 percent to $72.61 in pre-market trading. The results were slightly ahead of a revised forecast the company gave in January after a stronger-than-expected holiday shopping season. "Lululemon needed to just blow the earnings results out of the way, which was going to be hard" given January's forecast, said Brian Sozzi, chief equities analyst at NBG Productions. Sozzi said the inventory growth over and above same-store sales would likely raise concerns that margins could deteriorate further in the first half of the year. For its fiscal fourth quarter ended January 29, net income rose to $73.5 million, or 51 cents a share, from $54.8 million, or 38 cents, a year earlier. Analysts, on average, had expected earnings of 49 cents a share, according to Thomson Reuters I/B/E/S. Total revenue rose 51.4 percent to $371.5 million, higher than analysts had expected, while same-store sales, a key measure for retailers, climbed 26 percent. (Editing by Frank McGurty) Link this Share this Digg this Email Reprints

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