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Lululemon sees slower fourth-quarter sales growth, plans Hong Kong store

Lululemon yoga mats are seen at the retailer’s Yorkville store in Toronto.

Moe Doiron/Moe Doiron/The Globe and Mail

Canadian yoga-inspired clothing chain Lululemon Athletica Inc. saw profit and sales increase in the third quarter but is anticipating a slump in sales growth as the year winds down.

The retailer also said it plans to open its first full-product store in Hong Kong and to test markets in up to 15 countries over the next two years.

Lululemon chief executive officer Christine Day said on a conference call Thursday for analysts and media that the company is actively seeking real estate for a store in the Hong Kong market after the success of its two showrooms there.

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Plans also include the opening of an additional showroom in London next year and exploring the potential of as many as 15 markets in Europe and Asia over the next two years.

Vancouver-based Lululemon posted net profit of $57.3-million (U.S.) or 39 cents per share in the third quarter, compared with profit of $38.3-million or 27 cents in the year-earlier period.

Gross profit increased 36 per cent to $175.3-million in the quarter, but as a percentage of net revenue gross profit decreased to 55.4 per cent from 55.8 per cent in the third quarter of fiscal 2011.

Sales rose 37 per cent to $316.5-million from $230.2-million in the year-earlier period.

The company said in an updated outlook that it expects same-store sales in the fourth quarter to increase in the "high single digits."

That compares with same-store sales growth of 26 per cent in last year's fourth quarter.

For the third quarter, same-store sales -- a critical retail industry measure of sales at outlets open a year or more -- increased by 18 per cent.

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"We expect a soft start to the [fourth] quarter," Lululemon chief executive officer John Currie said on the call.

But he added that the company is in "a solid inventory position" for the fourth quarter.

Lululemon has experienced inventory problems over the past year as it tried to keep up with consumer demand.

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About the Author
Quebec Business Correspondent

Bertrand has been covering Quebec business and finance since 2000. Before joining The Globe and Mail in 2000, he was the Toronto-based national business correspondent for Southam News. He has a B.A. from McGill University and a Bachelor of Applied Arts from Ryerson. More

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