Lululemon Promises Plenty Of Yoga Pants. By: Dreier, Fred, Forbes.com, 3/22/2012
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Lululemon Promises Plenty Of Yoga Pants
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When Lululemon Athletica's CFO John Currie discussed the company's 2010 annual report last March, he wasted little time in naming the company's biggest challenge: The supply of yoga pants was running low.
"With late deliveries during the first part of Q1 and no opportunity to accelerate product deliveries until April, our sales will be limited to a level of growth below the demand that we have seen," Currie said at the time.
For a fast-growing retailer, not having enough supply to keep customers happy is a real problem.
No wonder then that it was one of the key problems that Lululemon tackled in the past year and an area that Currie addressed today when he and the company's CEO Christine Day presented the 2011 annual results. Day talked about the company's supply woes as a thing of the past, thanks to investments in the distribution chain and an 81 percent increase in total inventory over March 2011 levels.
"We have a team that forecasts fabrics now. We have a new head of raw materials, and we made investments in our sourcing team and production team," Day said. "We brought on some additional factory capacity, and the main part is we have a bigger inventory of fabric which has allowed us to have more choices and more responsiveness."
The investments, Day said, will allow Lululemon to glide into a strong 2012 year without the same rough patch as in 2011. The company predicts first quarter revenue to be $270 million, a 45 percent jump from 2011 numbers. Lululemon also predicts 2012 total sales to hit $1.35 billion, and for earnings per share to be at $1.50. It will need to keep up the momentum to justify its rich premium; it trades at 67 times earnings.