Lululemon customers up to now aren’t balking at higher prices on the retailer’s leggings and sports bras, Chief Executive Officer Calvin McDonald said Thursday.
The athletic apparel maker reported fiscal-first quarter profit and revenue that outpaced Wall Street’s expectations, boosted by double-digit growth online and within the retailer’s still nascent men’s division.
It also raised its financial outlook for fiscal 2022, expecting the momentum in its business to proceed regardless of broader economic headwinds, including red hot inflation and the snarled supply chain.
Lululemon, which caters to a more affluent customer, joins a bunch of shops including Levi Strauss & Co., Nordstrom and Macy’s high-end Bloomingdale division which might be luring shoppers with enough more money to splurge on latest clothes and accessories while prices are rising at rates last seen 4 a long time ago. In late March, Lululemon said it could be raising prices on certain items to assist offset higher costs for raw materials, labor and air freight.
Pedestrians seen walking past Canadian athletic apparel retailer Lululemon in Shanghai.
Alex Tai | SOPA Images | LightRocket | Getty Images
Lululemon specifically was seen as a pandemic beneficiary, as people sought out stretchy pants and cozy clothing to wear at home. But now, at the same time as Americans emerge from their homes to return to offices and social outings, they’re still buying so-called athleisure items. Lululemon has also broadened its assortment more recently to incorporate footwear and skin-care products.
“Our product pipeline stays very strong and it is the bedrock of the business,” McDonald said on a call with analysts.
Lululemon sees sales in fiscal 2022 in a spread of $7.61 billion to $7.71 billion, up from a previous forecast of $7.49 billion to $7.62 billion. Analysts were in search of $7.54 billion, in response to Refinitiv data.
The corporate expects to earn, on an adjusted basis, between $9.35 and $9.50 per share, up from a previous range of $9.15 to $9.35. Analysts were in search of per-share earnings of $9.28.
Lululemon’s shares were little modified during prolonged trading.
Here’s how Lululemon did in its fiscal first quarter compared with what Wall Street was expecting, based on Refinitiv data:
- Earnings per share: $1.48 vs. $1.43 expected
- Revenue: $1.61 billion vs. $1.53 billion
The retailer reported net income in its fiscal first quarter of $190 million, or $1.48 per share, compared with net income of $145 million, or $1.11 a share, a yr earlier.
Lululemon’s revenue grew roughly 32% to $1.61 billion from $1.23 billion a yr earlier.
Same-store sales, which track revenue online and at Lululemon stores open for not less than 12 months, rose 28% from the prior yr. Analysts had been in search of a rise of 20.4%, in response to StreetAccount estimates.
Women’s sales grew 24% on a three-year basis, and men’s grew 30% versus 2019 levels, the corporate said.
For the second quarter, Lululemon expects revenue to be within the range of $1.75 billion to $1.78 billion, topping analysts’ expectations for $1.71 billion.
Excluding the gain on the sale of an administrative office constructing, adjusted earnings per share are expected to be within the range of $1.82 to $1.87, ahead of analysts’ expectations for $1.77.
Regarding China, which continues to be facing Covid-related restrictions in some regions, McDonald said that roughly one-third of Lululemon’s 71 stores within the country were closed for a time frame in the newest quarter and into the second.
Nevertheless, he said the corporate will proceed to take a position in China, viewing the softened demand as a short-term challenge. “Our brand momentum stays strong,” the CEO told analysts.
Lululemon shares are down about 23% yr to this point.