Sales rebounded, but the yogawear retailer's quarterly profit fell as it spent more money developing new products. Fred Katayama reports.
Sales rebounding at Lululemon, but the yoga pants retailer's quarterly profit slipped. Comparable store sales rose 6 percent, reversing the slowdown from the previous quarter. But it's too early to go ga-ga over Lulu. Spending more money on developing new products hurt its gross margin. And it issued an earnings outlook for the current quarter that was below Wall Street's target. Oppenheimer senior analyst Anna Andreeva said, "Top line performance very impressive. We like the story on Lululemon. Little disappointing on gross margin performance." She also expressed concern over its ballooning inventory, which could be a result of the West Coast port disruption earlier this year. Lululemon is starting to see its business turnaround after its high-profile recall of yoga pants that were deemed too sheer and controversial comments by its founder, Chip Wilson. Lululemon has been expanding its men's apparel business. Lululemon's stock, which has defied the broader market with a nearly 15 percent gain this year, dropped in early trading.