Black Luon Pants Shortage Expected
March 18, 2013, 5:43 p.m. EDT
VANCOUVER, British Columbia, Mar 18, 2013 (BUSINESS WIRE) --
lululemon athletica inc. [NASDAQ: LULU; TSX: LLL] today notified guests
that we expect a shortage in our supply of black Luon pants and crops.
We have determined that certain shipments of product received from our
factories and available in store from March 1, 2013 do not meet our
technical specifications. The items affected are certain styles of
women's bottoms in our signature black Luon fabric. The ingredients,
weight and longevity qualities of the pants remain the same but the
coverage does not, resulting in a level of sheerness in some of our
women's black Luon bottoms that falls short of our very high standards.
Over the past weekend we pulled all of the affected black Luon women's
bottoms from our stores, showrooms and e-commerce site and are working
with our supplier to replace the fabric and our other manufacturers to
replace these key items as quickly as possible. We believe the affected
items represented approximately 17% of all women's bottoms in our stores
and for the near term there will be a shortage of these styles available
to our guests.
"We regret any inconvenience this has caused for our guests. It is
always our first priority to protect the quality of our fabrics that
keep our guest so loyal to our products. We will accept nothing less
than the very highest quality we are known for," said lululemon CEO
Christine Day.
We have used the same manufacturing partner on key fabrics since 2004.
This event is not the result of changing manufacturers or quality of
ingredients. We are working closely with them to understand what
happened during the period this fabric was made.
Guests who purchased black Luon pants after March 1st, either online or
in stores, and believe they have affected product are welcome to return
the product for a full refund or exchange. Please contact our Guest
Education Center at 1-877-263-9300 with questions as to how to return
items purchased through our e-commerce site.
We expect this issue will have a significant impact on our financial
results. Up to March 17, 2013, we were tracking to a comparable-store
sales percentage increase of 11% on a constant dollar basis and expected
revenue guidance to be in a range of $350 million to $355 million for
the first quarter of 2013. We now expect a comparable-store sales
percentage increase in the range of 5% to 8% for the first quarter of
2013, resulting in an expected revenue range of $333 million to $343
million. We are working to determine the impact on our earnings in the
first quarter as well as expected impact for the balance of 2013. We
will provide further information during our regularly scheduled earnings
call Thursday March 21st.
The company has posted a FAQ document on its Investor Relations website
under the webcasts, events & presentations link. Please refer to this
document for all questions regarding today's press release, as the
company remains in its quiet period until fourth quarter, 2012 earnings
are reported on March 21, 2013.
About lululemon athletica inc.
lululemon athletica
LULU
-3.77%
CA:LLL
-3.31%
is a yoga-inspired athletic
apparel company that creates components for people to live long, healthy
and fun lives. By producing products that help keep people active and
stress free, lululemon believes that the world will be a better place.
Setting the bar in technical fabrics and functional designs, lululemon
works with yogis and athletes in local communities for continuous
research and product feedback. For more information, visit www.lululemon.com.
Non-GAAP Financial Measure
Constant-dollar net revenue changes, which exclude the impact of changes
in foreign exchange rates, is not a United States Generally Accepted
Accounting Principle ("GAAP") performance measure. We provide
constant-dollar net revenue changes because we use the measure to
understand the underlying growth rate of revenue excluding the impact on
a quarter-by-quarter basis of changes in foreign exchange rates, which
are not under management's direct control. We believe that disclosing
net revenue changes on a constant-dollar basis is useful to investors
because it enables them to better understand the level of growth of our
business.
Forward-Looking Statements:
This press release contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934 that involve risks, uncertainties
and assumptions, such as statements regarding the effect of shipments of
products that fail to comply with our technical specifications or that
fail to conform to our quality control standards, the duration of any
shortage of products available for sale in our stores or for delivery to
guests or our ability to obtain replacement products in a timely manner,
any expected loss of net revenue resulting from the inability to sell
those products and related increased administrative and shipping costs,
and our future financial condition or results of operations. In many
cases, you can identify forward-looking statements by terms such as
"may," "will," "should," "expects," "plans," "anticipates," "outlook,"
"believes," "intends," "estimates," "predicts," "potential" or the
negative of these terms or other comparable terminology. These
forward-looking statements are based on management's current
expectations but they involve a number of risks and uncertainties.
Actual results and the timing of events could differ materially from
those anticipated in the forward-looking statements as a result of risks
and uncertainties, some of which are described below. You should be
aware that our success depends on the value and reputation of the
lululemon athletica brand. Negative publicity regarding any of our
products or our the production methods of any of our suppliers or
manufacturers, including the shipments of defective product discussed
above, could adversely affect our reputation and sales and force us to
locate alternative suppliers or manufacturing sources. Our expectation
regarding the impact of these shipments of products that fail to comply
with our technical specifications may not be correct and the impact on
our revenue and results of operations may be much greater. Furthermore,
our results of operation could be materially harmed if we experience or
become aware of additional shipments of products that fail to comply
with our technical specifications or that fail to conform to our quality
standards, or if we experience a shortage of products available for sale
in our stores or for delivery to guests unless we are able to obtain
replacement products in a timely manner. We also risk the loss of net
revenue resulting from the inability to sell those products and related
increased administrative and shipping costs. Additionally, if defects in
the manufacture of our products are not discovered until after such
products are purchased by our guests, our guests could lose confidence
in the technical attributes of our products and our results of
operations could suffer and our business could be harmed. If we need to
replace an existing supplier or manufacturer, we may be unable to locate
additional supplies of fabrics or raw materials or additional
manufacturing capacity on terms that are acceptable to us, or at all, or
we may be unable to locate any supplier or manufacturer with sufficient
capacity to meet our requirements or to fill our orders in a timely
manner. Any delays, interruption or increased costs in the supply of
fabric or manufacture of our products caused by shipments of defective
products could have an adverse effect on our ability to meet customer
demand for our products and our results in lower net revenue and income
from operations both in the short and long term. Additional risk factors
are detailed in our Quarterly Report on Form 10-Q for the fiscal quarter
ended October 28, 2012, and in our Annual Report on Form 10-K for the
fiscal year ended February 3, 2013, to be filed with the Securities and
Exchange Commission and which will be available at www.sec.gov.
You are urged to consider these factors carefully in evaluating the
forward-looking statements contained herein and are cautioned not to
place undue reliance on such forward-looking statements, which are
qualified in their entirety by these cautionary statements. The
forward-looking statements made herein speak only as of the date of this
press release and the company undertakes no obligation to publicly
update such forward-looking statements to reflect subsequent events or
circumstances.
http://cts.businesswire.com/ct/CT?id=bwnews&sty=20130318006649r1&sid=cmtx4&distro=nx
SOURCE: lululemon athletica inc.
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