Lululemon reported third-quarter sales increase in North America and overseas regions, but its Christmas prediction fell short of Wall Street expectations.
The athletic gear business, which is best known for its yoga pants and belt bags, outperformed Wall Street’s third-quarter sales forecast. Lululemon reported good third-quarter demand and a strong start to the holiday shopping season on Thursday, but the retailer’s shares dipped in extended trade after it provided a tepid fourth-quarter estimate.
The following is how the corporation performed in its third fiscal quarter:
- Adjusted earnings per share: $2.53. It was unclear whether the statistics were comparable to what Wall Street expected based on an LSEG, now known as Refinitiv, survey of analysts.
- Revenue: $2.20 billion vs the projected $2.19 billion
The company’s net income for the three months ended Oct. 29 was $249 million, or $1.96 per share, compared to $255 million, or $2 per share, the previous year. Sales increased to $2.2 billion, up around 19% from $1.86 billion the previous year.
Sales increased 12% in North America and 49% worldwide during the quarter, but the retailer’s holiday estimate fell short of expectations. According to LSEG, Lululemon expects fourth-quarter sales of $3.14 billion to $3.17 billion, which is less than the $3.18 billion projected by analysts. Lululemon anticipates earnings of $4.85 to $4.93 per share, compared to LSEG projections of $4.80 to $5.19. Lululemon expects full-year sales to be between $9.55 billion and $9.58 billion, compared to LSEG expectations of $8.11 billion to $9.90 billion.
“We’re pleased with the trends we’ve seen so far this holiday season.” “Having said that, the majority of the quarter is still ahead of us,” finance chief Meghan Frank said on a conference call with analysts. “We remain aware of the uncertainties in the macro environment, and we continue to plan a business for multiple scenarios.” In extended trade, the stock dropped roughly 3%.
On a conference call with investors, CEO Calvin McDonald stated that this year’s Black Friday was the “single biggest day” in the company’s history. He went on to say that Lululemon is “encouraged” by the early holiday season trends.
“As we enter the holiday season, we are pleased with our early performance and are well-positioned to deliver for our guests in the fourth quarter,” McDonald’s said in a statement. “I am energized by the significant opportunities ahead.”
According to StreetAccount, overall comparable sales increased 13% during Lululemon’s third quarter, exceeding the 12.4% increase projected by analysts. Comparable sales at the retailer’s locations were 9%, lower than the 11.7% forecast by Wall Street. However, comparable direct-to-consumer sales increased 18%, exceeding the 16.9% forecast by analysts, according to StreetAccount.
Lululemon paid $72.1 million in impairment charges for Mirror, the linked fitness firm it bought for $500 million during the COVID-19 outbreak and is now winding down. These expenses are in addition to the $443 million in impairment charges disclosed earlier this year for the equipment.
Lululemon will no longer sell the Mirror gadget or provide content for its Studio app as part of a new agreement with erstwhile rival Peloton. Peloton will instead offer all of the content for Lululemon’s app, and the retailer will become Peloton’s primary athletic gear partner.
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