Lululemon Athletica (LULU)
Q4 2011 Earnings Call
March 22, 2012 9:00 am ET
Unknown Executive -
Christine M. Day - Chief Executive Officer, President and Director
John E. Currie - Chief Financial Officer, Principal Accounting Officer, Executive Vice President and Treasurer
Sheree Waterson - Chief Product Officer and Executive Vice President
Adrienne Tennant - Janney Montgomery Scott LLC, Research Division
Paul Alexander - BofA Merrill Lynch, Research Division
Michelle Tan - Goldman Sachs Group Inc., Research Division
Stacy W. Pak - Barclays Capital, Research Division
Kimberly C. Greenberger - Morgan Stanley, Research Division
Omar Saad - ISI Group Inc., Research Division
Dana Lauren Telsey - Telsey Advisory Group LLC
Erika K. Maschmeyer - Robert W. Baird & Co. Incorporated, Research Division
Howard Tubin - RBC Capital Markets, LLC, Research Division
Edward J. Yruma - KeyBanc Capital Markets Inc., Research Division
Taposh Bari - Jefferies & Company, Inc., Research Division
Lizabeth Dunn - Macquarie Research
John D. Kernan - Cowen and Company, LLC, Research Division
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Good day, ladies and gentlemen, and welcome to the lululemon athletica Q4 2011 Results Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded. I would now like to introduce the host for today's conference call, Ms. Teresa [ph]. You may begin.
Okay, thanks. Good morning, everybody. Thanks for joining us on the Fourth Quarter and Fiscal 2011 Conference Call. A copy of today's press release is available in the Investor Relations section of lululemon's website at www.lululemon.com, or furnished on Form 8-K with the SEC and available on the Commission's website at www.sec.gov. Shortly after we end this morning, a recording of today's call will be available as a replay for 30 days in the Investor Relations section of the company's website.
Hosting our call today is Christine Day, the company's CEO; and John Currie, the company's CFO. Sheree Waterson, our Chief Product Officer will also be available during the Q&A portion of the call. We would like to remind everyone, of course, that statements contained on this call which are not historical facts may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results might differ materially from those projected in such statements due to a number of risks and uncertainties, all of which are described in the company's filings with the SEC. [Operator Instructions]
And with that, I'll turn it over to Christine Day.
Christine M. Day
Thank you, Teresa [ph]. Good morning, everyone, and thank you for joining us today to discuss our fourth quarter results. By now, you will have seen the headline of our release celebrating the cool revenue milestone, starting with B and ending with 9 zeros. We are proud of achieving this important milestone as a company. But far more important than the number itself are the beliefs, values, culture and people that achieved it and our guests that value our products and our guest experience. Our success now and in the future is based on a culture of high performance and leadership development. We find the right talent, empower our employees, teach personal accountability and judgment and share our business strategy at every level across the business to ensure that we engage our employees and give them a sense of purpose. So when we achieve these kind of results, we know that it is the entire team that we have to thank.
The goals we set for 2011 were: to grow same-store sales; add up to 30 high-productivity new stores; evolve our e-Commerce to a hybrid model; balance our inventory to meet demand; build a foundation to support the continued growth; and to deliver innovative product. Our focus on execution delivered strong results for each of these objectives. We added 37 stores and increased comparable store sales by 20% for the year, resulting in a record $2,004 in sales per square foot for all of our retail business. In addition, our new e-Commerce site was launched in April and now represents 11% of total sales. To put this achievement into perspective, in the fourth quarter alone, we did $50 million in e-Commerce sales compared to $57 million for the full year in 2010.
As discussed in our last call, to meet guest demand for Q4, we strategically increased our inventory position and bought the right mix of new styles and color. Our strategy paid off and translated into a 26% comp for the quarter on top of a 28% last year. We were also able to provide product to our outlets and return to our traditional warehouse sales and to explore smaller markets in Canada with 5 pop-up stores over the holiday season. Other than our planned scarcity philosophy, we believe we met true demand fourth quarter. Our other key objective for the quarter was to enter 2012 with a strong inventory position to break the cycle of chase. And we are pleased to state that in Q1 2012, have strong sales momentum due to a clean inventory and strong flow of products.
We have found the right balance between delivering strong growth and maintaining our focus on innovation and execution. Buying more just to meet a number may deliver short-term results, but also creates brand and operating risks. In Q4, we gained traction as our strategies of investing in people and systems to support our growth. We added depth and breadth in product, IT, store support, and we enhanced our creative, digital and brand teams. We also added business intelligence, HR and IT legacy system investments, building network and operational capability. As previously discussed, these investments will continue throughout 2012. Other key investments include product innovation and supply chain enhancements. We will continue to focus on a tight base of manufacturers to ensure the level of quality, innovation and function that our guest expects. We are always exploring new techniques in garment construction, new fabric technologies and finishings, which is one of the things that we believe that we are best in the world. This requires continued investment and development in partnership with our factories to support these innovations. It is our practice to not take pricing as we seed new innovation. And while these investments may slightly decrease margins, they develop the strength of the brand in the long term.