Lululemon on Thursday reported better-than-Wall Street earnings on sales and bottom line, and raised its full-year guidance, helped by improvements in China and shipping costs.
The company’s shares rose more than 12% in after-hours trading.
Here’s how the retailer tackled it First Quarter of Fiscal Year Compared to Wall Street forecasts based on analyst surveys compiled by Refinitiv:
- Earnings per share: $2.28 vs. expected $1.98
- Earnings: $2 billion vs. $1.93 billion forecast
The company reported net income of $290.4 million ($2.28 per share) for the three months ended April 30, compared with $190 million ($1.48 per share) in the same period last year.
Revenue increased 24% to $2.0 billion from $1.61 billion in the same period last year.
Revenue in China alone was up 79% year-over-year, but at the time China was still reeling from COVID-19 restrictions, with about a third of Lululemon’s 71 stores in China temporarily closed.
Meghan, Chief Financial Officer, said, “Our first quarter performance was strong with strong customer response to our product offerings in all markets around the world. Our sales trend in China accelerated significantly, Lower airfares contributed to our financial performance exceeding our plans.” In his statement, Frank said: “We are pleased with the momentum going into the second quarter and full year as reflected in our revised outlook for 2023.”
Refinitiv said it expects full-year revenue of $9.44 billion to $9.51 billion, up from previous $9.31 billion and $9.41 billion, and Wall Street’s forecast of $9.3 billion. It is said to be over $70 million. Full-year earnings are expected to be between $11.74 and $11.94 per share, up from a range of $11.50 to $11.72. That also beat analyst expectations of $11.61 a share, according to Refinitiv.
Lululemon expects second-quarter sales to be in the range of $2.14 billion to $2.17 billion, representing growth of about 15 percent. Lululemon expects diluted earnings per share in the range of $2.47 to $2.52 for the current quarter. The outlook for the second quarter was broadly in line with Wall Street expectations, according to Refinitiv.
Lululemon shares surged in after-hours trading after a strong quarterly report.
The apparel retailer, which sells high-end yoga pants, shoes and other sportswear, saw a 24% year-over-year increase in sales. A strong comparison was successful The year-earlier quarter came in a relatively comfortable macroeconomic environment.
This time last year, lululemon had just raised prices, but shoppers were still flocking to stores and filling digital carts. And they were not yet feeling the pressure of sustained inflation.
Comparable total sales, which tracks digital revenue and sales for stores that have been open for at least 12 months, increased 14% in the quarter, falling short of the expected 15.1%, according to StreetAccount. .
Comparable store sales in the most recent quarter beat expectations, up 13% compared to StreetAccount’s 8.3% increase, but direct-to-consumer revenue fell short of expectations, up 16% year-over-year (22.3%). I was. According to StreetAccount, the percentage that analysts had expected was up by %.
DTC revenues increased year-over-year and represented 42% of total sales (45% in the same period last year).
Gross margin for the quarter increased 3.6 percentage points to 57.5% due to airfare reductions. That beat analysts’ expectations of 56.7%, according to Street Account.
By category, women’s sales increased 22%, men’s sales increased 17%, and accessories increased 67%.
Lululemon’s continuing problem with inventory was $1.58 billion at the end of the quarter, up 24%, and is expected to grow 20% in the next quarter. In an earnings call, company executives said they were “comfortable” with their company’s position, arguing that inventories were in line with sales growth.
Still, they acknowledged that Lululemon had work to do.
“There is still an opportunity to get stock… [turnover rates] Return to historical level. We’ve seen some significant improvements in supply chain and lead times, but we’re not quite back to where we were in the past,” Frank said on the earnings call, adding, “So it’s hard to say when we’ll get back to that level. It’s too early, but then that would be a long-term goal.”
The company expects to open 50 net new directly managed stores this fiscal year. Of these, 30-35 will be put on the international market, with the majority planned for China.
While the company primarily caters to high-income consumers who tend to cope better with macroeconomic pressures, retailers across the industry said: Discretionary spending backlash and expensive items.
Nordstrom era Wednesday night financial results briefingExecutives said high-end customers were “pretty resilient” but also more cautious.
Lululemon, meanwhile, said it hasn’t seen any changes in its customers’ shopping habits.
CEO Calvin McDonald said, “In terms of guest metrics, we’re still doing very well. We haven’t seen any change in cohort behavior in terms of frequency of purchases or engagement.” “Additionally, in the first quarter, we saw a 22% increase in transactions by existing guests and a 28% increase in transactions by new guests.”
During the current earnings season, some analysts warned soft-goods retailers — retailers that sell items such as clothing and shoes — that: We may see lower profit margins Due to increased promotional activity and a general recession across the sector.
Results on this front have been mixed so far.
Many retailers are benefiting from supply chain tailwinds, such as lower shipping costs, boosting profit margins. But for some, much of that savings evaporates due to increased promotions and promotions. Increased shrinkabove all headwinds.
The company announced: Acquired Miller for $500 million In June 2020, during the height of home fitness, people will continue to exercise at homeeven after the Covid pandemic restrictions ended and gyms reopened.
The division has since rebranded itself as Lululemon Studios, but it still weighs on its balance sheet.
During the last fiscal quarter, the company Impairment charges of $443 million Related to Mirror, he told investors that hardware sales were below expectations.
Lululemon acknowledged that the home fitness market is under pressure.
Similar to PelotonLululemon is starting to pivot its segment away from being solely focused on hardware.
Recently, the company released a new digital app for Lululemon Studio. At $12.99 a month, the same as his Peloton initial membership, customers can access fitness classes without buying any hardware.