Laurent Potdevin, Chief Executive Officer of yoga-inspired apparel company Lululemon Athletica Inc., has reassured investors of the company's expansion plans amidst financial woes.
The company's shares dropped 10 percent in morning trading on Thursday, which has been attributed to unfavorable second-quarter results. Although the company improved sales and profit during the third financial quarter, many investors remain cautious, given its overall financial decline.
"It is really, really important for everybody to understand that the short-term gross margin pressure that we are experiencing is not a result of higher markdowns or quality issues," Potdevin told investors during a conference call, according to the Vancouver Sun.
"We are building a very scalable, complex platform at a time when we are growing internationally and we have added resources to the team. And we have validated that not only we will see the margin expansion that we have committed to but will foresee it in 2016 and beyond."
The company's gross margin in the quarter ended Aug. 2, which excludes the cost of goods sold, fell below the 46.8 percent mark expected by analysts, the site also reports. Last year, this figure remained at 50.5 percent.
Lululemon's net income has also fallen prey to plunges: excluding the cost of goods sold, expenses and taxes, the company earned $47.7 million, approximately $1.1 million lower than the previous year.
Despite these temporary losses, however, the company's earnings per share rose 34 cents along with its overall revenue. The latter figure has been estimated at $453 million.
Potdevin has touted the company's expansion plans, including efforts to create new stores across the world. He also promoted the company's new yoga pant wall initiative, which was featured in Lululemon stores last week.
Potdevin said the initiative "is a powerful illustration of our people working together to innovate, educate and reinvent the category that we created back in 1998," the Vancouver Sun also reports.
Lululemon Athletica Inc. was founded in 1998 in Vancouver, British Columbia.
