Lululemon shares hit new high

Shares in Vancouver-based Lululemon Athletica made a new high Thursday after the yoga-inspired retailer posted better-than-expected profits and despite a warning that full-year earnings may not be as high as analyst have predicted.

Its stock rose as high as $76.63 after a busy holiday shopping period helped power fourth-quarter profits higher as revenues jumped 51 per cent.

The shares closed up $2.44, or 3.32 per cent, at $75.95 on the Toronto Stock Exchange.

Net income came in at $73.5 million US, or 51 cents per share, for the three months ended Jan. 29.

That was two cents higher than analysts had expected, according to a poll by Thomson Reuters.

The resulted compared with earnings of $54.8 million, or 38 cents per share, a year earlier.

Revenues grew to $371.5 million from $245.4 million. Same-store sales, or sales at stores open at least a year, increased 26 per cent.

CEO Christine Day warned analysts in a conference call that a slate of new products in the testing stages could pressure its profit margins in the first quarter and beyond.

Day said the company won't force its customers to eat the expenses of product development.

"It is our practice not to take pricing as we seed new innovations," she said.

"While these investments may slightly decrease margins, they develop the strength of the brand in the long term."

As a result, Lululemon said it expects revenue to come in at $1.3 billion to $1.33 billion in 2012.

Diluted earnings are predicted to be in the range of $1.50 to $1.57 cents per share for the year, which is below street expectations of $1.61 according to RBC Capital Markets analyst Tal Woolley who has a target of $1.62. Lululemon has been fixing troubles with its inventory supply that had once left it struggling to keep up with demand, and ramping up an online store that carries a wider selection.

The popularity of Lululemon yoga and run apparel is already well-established in Canada and is growing south of the border – a phenomenon that has been reflected in quarterly results that have soared past expectations for more than a year.

But that has also created supply problems in its stores, where its body-hugging pants, shorts and tops fly off the shelves faster than inventory can be restocked.