Lululemon‘s U.S. progress is constant to gradual, however the athletic attire retailer is making huge features overseas, resulting in a 9% improve in gross sales yr over yr.
The yoga pants firm on Thursday beat Wall Street’s expectations on the highest and backside traces and stated it is “happy” with the begin to the vacation season.
Here’s how Lululemon carried out in its fiscal third quarter in contrast with what Wall Street was anticipating, primarily based on a survey of analysts by LSEG:
- Earnings per share: $2.87 vs. $2.69 anticipated
- Revenue: $2.40 billion vs. $2.36 billion anticipated
Shares climbed about 8% in prolonged buying and selling Thursday.
The firm’s reported internet revenue for the three-month interval that ended Oct. 27 was $352 million, or $2.87 per share, in contrast with $249 million, or $1.96 per share, a yr earlier
Sales rose to $2.40 billion, up about 9% from $2.20 billion a yr earlier.
For the all-important vacation buying quarter, Lululemon is anticipating income to be between $3.48 billion and $3.51 billion, representing progress of 8% to 10% from the prior yr. Analysts had been anticipating income of $3.50 billion, or progress of 9.1%, which is roughly in step with the midpoint of the steerage, in line with LSEG.
It’s anticipating earnings per share to be between $5.56 and $5.64, the excessive finish of which is forward of the $5.59 analysts had anticipated, in line with LSEG.
For the complete yr, Lululemon tightened its income steerage and raised it by only a hair. It now expects fiscal 2024 income to come back in between $10.45 billion and $10.49 billion, in comparison with earlier steerage of between $10.38 billion and $10.48 billion. The outlook would prime the $10.44 billion that Wall Street had anticipated, in line with LSG
It’s anticipating earnings per share to be between $14.08 and $14.16, forward of the $13.97 that analysts had anticipated.
Lululemon has hit a tough patch during the last yr. It’s nonetheless rising, however at a slower tempo than it was beforehand, and the aggressive surroundings has gotten extra intense. Lululemon has at all times competed with legacy giants like Nike, Gap’s Athleta and Levi‘s Beyond Yoga, however newer disrupters resembling Vuori and Alo Yoga are additionally taking share from the Canadian retailer.
The firm has turned to China for progress, which up to now is lifting gross sales throughout the general enterprise. Company-wide comparable gross sales grew 4% in the course of the quarter, forward of the three.2% progress Wall Street was anticipating, in line with StreetAccount.
Behind that quantity is a 2% slowdown in comparable gross sales within the U.S., however a 25% improve internationally. Overall income grew 2% within the Americas in the course of the quarter and 33% internationally. Still, the Americas stays Lululemon’s largest market, and worldwide remains to be a fraction of its general income.
Lululemon has additionally had a number of self-inflicted challenges. It fumbled a high-profile product launch earlier this yr and missed out on gross sales within the U.S. when it failed to supply the colours and sizes that its core clients desired.
When the corporate reported earnings in August, CEO Calvin McDonald insisted that the model stays robust within the U.S., however its girls’s enterprise had slowed as a result of it did not have sufficient new kinds to entice clients.
All of those points coincided with the departure of Lululemon’s longtime chief product workplace Sun Choe, who resigned in May and joined V.F. Corp. It additionally got here at a time when shoppers, reeling from persistent inflation and an economic system that feels worse than maybe it truly is, are choosier than ever and fewer forgiving when a model makes a mistake.
Amid its tough patch, Lululemon has turned to inventory buybacks to maintain Wall Street completely satisfied. It permitted a $1 billion improve to its inventory repurchase program this month. As of Thursday, it had roughly $1.8 billion remaining in this system.
Lululemon has additionally centered on boosting profitability amid unsure demand. During the third quarter, gross margin grew greater than anticipated, rising by 1.5 share factors to 58.5%, forward of the 57.5% that analysts had anticipated, in line with StreetAccount.
