Pedestrians pass by a Lululemon store.
Scott Mlyn | CNBC
Lululemon Athletica Inc. on Thursday reported quarterly earnings and revenue that beat analysts’ expectations, as shoppers stocked up on workout gear whilst surging prices have hurt other retailers’ apparel sales.
The corporate also raised its outlook for the yr. Shares rose about 9% in off-hours trading.
Here’s what the corporate reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: $2.20, adjusted, vs. $1.87 cents expected
- Revenue: $1.87 billion vs. $1.774 billion expected
Same store sales grew 23%, which beat StreetAccount’s estimate of 17.6%. Net sales rose 29% to $1.87 billion. The corporate said that traffic stays strong each in stores and online, whilst surging inflation cramps consumers’ spending.
Lululemon has a higher-income customer base that seems mostly unfettered by inflationary pressures. Still, other higher-end retailers like Nordstrom and Macy’s slashed their outlook this quarter on fears of slowing demand. Lululemon, alternatively, has boosted its guidance in two consecutive quarters.
“Despite the challenges around us within the macro-environment, guest traffic in our stores and on our e-commerce sites stays robust, which speaks to the strength of our multi-dimensional operating model,” Chief Financial Officer Meghan Frank said in a news release.
Store traffic increased over 30%, and ecommerce traffic rose over 40%, executives said on the earnings call Thursday. The corporate is hoping to spice up customer loyalty with a soon-to-launch membership program.
The membership program was announced at the top of the primary quarter. It has a free tier and a $39 monthly paid tier which give subscribers early access to product drops and exclusive items, in addition to invitations to in-person events.
The corporate said the traffic increases weren’t attributable to promotional programs or product markdowns.
“We’ve not modified our promotional cadence,” CEO Calvin McDonald said on the earnings call. “We’ve no plans to accomplish that.”
Lululemon continued brick-and-mortar expansion through the quarter, with 21 net recent stores for a complete of 600 locations.
Inventories were up 85% to $1.5 billion in comparison with the identical period last yr, but the corporate said it was “under-inventoried” on the time as a consequence of supply chain bottlenecks.
Retailers typically have needed to contend with swelling inventory levels as shoppers adjust their spending habits. Lululemon said Thursday it’s confident the inventory level will help it boost sales through the holiday shopping season.
The corporate said it now expects 2022 revenue of between $7.865 billion and $7.940 billion, up from the range of $7.610 billion to $7.710 billion it stated last quarter. The corporate also raised its adjusted earnings per share outlook to a variety of $9.75 to $9.90, from last quarter’s guidance of $9.35 to $9.50 adjusted.
The discharge also maintained the corporate’s long-term outlook of doubling net revenue to $12.5 billion from from 2021 to 2026. The plan includes an expansion of its menswear business, footwear, and membership-based fitness classes. Upon the plan’s announcement within the spring, some analysts were skeptical about Lululemon’s ability to realize the lofty longer-term goal.
Lululemon touted some early success with the plan. It launched recent shoes through the quarter, while its men’s business saw 27% growth. The corporate also reported growth across the entire countries wherein stores are currently energetic.
Read the earnings release here.