Lululemon’s adjusted earnings exclude a tax expense of $30.9 million related to the repatriation of foreign earning to fund a $450 million share repurchase program that the firm also announced this morning. On a GAAP basis, earnings per share came in at $0.13.
Same-store sales fell 4% year-over-year in the quarter, while total comparable sales, including online sales, rose 1%. Direct-to-consumer sales now make up 17.2% of the company’s total sales.
For the second quarter of 2014, the company guided EPS at a range of $0.28 to $0.30 on revenues in the range of $375 million to $380 million. The consensus estimate called for EPS of $0.36 on revenues of $387.19 million.
For the full 2014 fiscal year, the company guided EPS in a lowered range of $1.80 to $1.90 on revenues of $1.77 billion to $1.80 billion, compared with the consensus estimates for EPS of $1.89 on revenues of $1.8 billion.
As weak as the results are and the forecast is, the company also has other problems. The CFO this morning announced his retirement at the end of the current fiscal year. Wednesday, Chip Wilson, Lululemon’s founder/former CEO/former chairman, was reported to have voted against the company’s new chairman and another director in their bids for reelection to the board. Wilson is the company’s largest shareholder with a 28% stake in the company, and he was forced out after saying that some people were too fat to be wearing the company’s yoga pants.
The company’s CEO said:
We are pleased that Q1 results were slightly ahead of our expectations. 2014 is very much a transitional year for lululemon, and we are on track with the improvements we have set out to achieve. … Despite a reduced outlook, I am confident that the work we are doing today will only enhance our premium positioning as we continue to lead as the market innovator.
Lululemon shares were down about 8.5% in premarket trading Thursday morning, at $40.95 in a 52-week range of $42.28 to $77.75.
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