Lululemon released its earnings results for the first quarter of fiscal 2014, which came in slightly ahead of expectations. Net revenue was $384.6 million, up 11 percent from the same period 2013, though comparable store sales increased just 1 percent, with direct-to-consumer sales increasing 25 percent and same-store corporate sales falling 4 percent.
As far as those comp sales go, CEO Laurent Potdevin says that store traffic has improved but conversion rates are down, meaning more customers are coming into stores but they're leaving empty-handed. That's a result of a less-than-ideal product assortment, which Chief Product Officer Tara Poseley says "hasn't evolved as quickly as it should have."
Weaker product assortment has been an ongoing problem for the company, and in the first quarter Lululemon over-invested in its core product range without enough depth of seasonal product. Poseley says her team is working to shift that balance back.
"We're maintaining guests coming in, and when the products are right, that should deliver a rebound," Potdevin says.
Of course, that's assuming that those customers who aren't buying right now don't get turned off. Hopefully Lululemon can find its fix sooner rather than later.
The yogawear maker also announced that CFO John Currie will be retiring this year after seven years with the company. Currie will remain on board as the the team searches for his replacement, Potdevin says.