Lululemon‘s U.S. growth is continuing to slow, but the athletic apparel retailer is making big gains abroad, leading to a 9% increase in sales year over year.
The yoga pants company on Thursday beat Wall Street’s expectations on the top and bottom lines and said it’s “pleased” with the start to the holiday season. Still, on a call with analysts, CEO Calvin McDonald took a cautious tone when discussing the company’s fourth quarter outlook.
“While we feel good about the start of the holiday season, we still have large volume weeks in front of us,” said McDonald. “Given the shorter holiday shopping season, we continue to be thoughtful in our planning for quarter four overall.”
Here’s how Lululemon performed in its fiscal third quarter compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:
- Earnings per share: $2.87 vs. $2.69 expected
- Revenue: $2.40 billion vs. $2.36 billion expected
Shares climbed about 8% in extended trading Thursday.
The company’s reported net income for the three-month period that ended Oct. 27 was $352 million, or $2.87 per share, compared with $249 million, or $1.96 per share, a year earlier
Sales rose to $2.40 billion, up about 9% from $2.20 billion a year earlier.
For the all-important holiday shopping quarter, Lululemon is expecting revenue to be between $3.48 billion and $3.51 billion, representing growth of 8% to 10% from the prior year. Analysts were expecting revenue of $3.50 billion, or growth of 9.1%, which is roughly in line with the midpoint of the guidance, according to LSEG.
It’s expecting earnings per share to be between $5.56 and $5.64, the high end of which is ahead of the $5.59 analysts had expected, according to LSEG.
On a call with analysts, finance chief Meghan Frank said the company is planning the business “prudently” given the shortened holiday shopping season and the “uncertain macro environment.”
For the full year, Lululemon tightened its revenue guidance and raised it by just a hair. It now expects fiscal 2024 revenue to come in between $10.45 billion and $10.49 billion, compared to previous guidance of between $10.38 billion and $10.48 billion. The outlook would top the $10.44 billion that Wall Street had expected, according to LSG
It’s expecting earnings per share to be between $14.08 and $14.16, ahead of the $13.97 that analysts had expected.
Lululemon has hit a rough patch over the last year. It’s still growing, but at a slower pace than it was previously, and the competitive environment has gotten more intense. Lululemon has always competed with legacy giants like Nike, Gap’s Athleta and Levi‘s Beyond Yoga, but newer disrupters such as Vuori and Alo Yoga are also taking share from the Canadian retailer.
The company has turned to China for growth, which so far is lifting sales across the overall business. Company-wide comparable sales grew 4% during the quarter, ahead of the 3.2% growth Wall Street was anticipating, according to StreetAccount.
Behind that number is a 2%…
Read More: Lululemon (LULU) earnings Q3 2024
