Lululemon on Thursday, it said holiday earnings beat expectations, however the sportswear retailer’s guidance was below estimates as its growth in North America stagnated.
Here’s how the corporate performed within the fiscal fourth quarter in comparison with Wall Street expectations, based on a survey of analysts by LSEG, formerly generally known as Refinitiv:
- Earnings per share: $5.29 vs. expected $5.00
- Revenue: $3.21 billion vs. $3.19 billion expected
The company’s net income for the three months ended Jan. 28 was $669.5 million, or $5.29 per share, compared with $119.8 million, or 94 cents per share, a 12 months earlier.
Sales rose to $3.21 billion, up about 16% from $2.77 billion a 12 months earlier.
Shares fell about 10% in prolonged trading on Thursday.
Like other firms, Lululemon is scuffling with uncertain demand and a slowdown in discretionary spending, which is hitting the apparel industry particularly hard. Investors have been watching how Lululemon performs in North America, its largest region by sales, weathering tougher comparisons from last 12 months and competing with consumers who favor experiences over goods comparable to clothes and shoes.
During the quarter, sales within the Americas increased 9% in comparison with 29% growth within the year-ago period. While Lululemon continues to grow within the region, its growth rate has slowed significantly as Lululemon focuses on international expansion.
Meanwhile, international sales increased by 54%, in line with reports, with sales in China increasing by 78% and 36% in other Lululemon markets.
Comparable sales rose 12% within the quarter, just shy of the 12.3% growth analysts expected, in line with StreetAccount.
Lululemon expects net revenue to be between $2.18 billion and $2.20 billion for the present quarter, a rise of 9% to 10%. According to LSEG, analysts expected a forecast of $2.25 billion, a rise of 12.5%.
According to LSEG, it expects diluted earnings per share to be between $2.35 and $2.40, below the $2.55 expected by analysts.
According to LSEG, it expects full-year sales of $10.7 billion to $10.8 billion, compared with estimates of $10.9 billion.
It expects diluted earnings per share to be $14 to $14.20 this 12 months, compared with estimates of $14.13, in line with LSEG.
“As you’ve heard from others in our industry, there has been a recent shift in consumer behavior in the U.S. and we’re dealing with a slower start to the year in that market,” CEO Calvin McDonald said on a call with analysts on Thursday. “We see this as an opportunity to continue our attacking momentum and are focused on investments that will continue our growth trajectory. Outside the U.S., our business remains strong, with all of our international markets in Canada.”
Lululemon has long been certainly one of the leaders in the ladies’s sportswear market, however the Vancouver-based company faces more competition than ever. New entrants like Alo Yoga and Vuori are taking market share from Lululemon, and the corporate has needed to work harder to face out in a more crowded category.
The retailer has been working to expand its footwear offerings and grow its men’s clothing business. This quarter, it opened its first men’s store in Beijing, a key growth marketplace for the corporate. It debuted its first men’s sneaker, the CityVerse, in February and plans to launch latest running styles for each men and girls as performance sneakers proceed to be a brilliant spot in a footwear market that may otherwise remain stagnant.
Ahead of the vacation, McDonald said Black Friday was the “biggest day” in the corporate’s history and he was “encouraged” by the trends he saw earlier within the season. However, the retailer’s forecasts for the vacation quarter were barely different from analysts’ expectations.
In January, it raised that guidance after concluding that sales were “balanced across channels, categories and geographies,” Meghan Frank, chief financial officer, said in a press release.
Lululemon said it expects fiscal fourth-quarter net revenue to be between $3.17 billion and $3.19 billion within the fourth quarter, up from the previous range of $3.14 billion to $3.17 billion. It also raised its earnings per share guidance and said it expected a variety of $4.96 to $5 per share, compared with the previous range of $4.85 to $4.93.
Read the total results announcement Here.
