Lululemon forecasts better-than-expected sales as digital business accelerates

Lululemon forecasts better-than-expected sales as digital business accelerates

In the fourth quarter, its online sales soared 92% as many consumers preferred to stay at home and shop from the comfort of their couches during the Covid pandemic.

 

The company said sales of women's products rose 19% in the quarter and men's products grew 17%.

 

Lululemon announced Tuesday that fourth-quarter revenue and profit beat analysts' expectations as the athletic apparel maker's online business and sales in its men's and women's divisions both grew by double digits.

 

It provided an optimistic sales outlook for the current quarter and full year, expecting consumer demand for its sweat-wicking, quick-drying leggings and sports bras to continue. The retailer has been a huge beneficiary of the pandemic, with many people stuck at home turning to them as daily workout wear.

 

The company's shares, which fell more than 1% in after-hours trading , have risen more than 60% in the past 12 months.

 

Lululemon's performance compared with analysts' expectations for the quarter ended Jan. 31 was mixed , according to a Refinitiv survey:

 

EPS: Adjusted $2.58 vs. $2.49 expected . Revenue: $1.73 billion vs. $1.66 billion expected .

 

Lululemon reported net income of $329.8 million, or $2.52 per share, compared with $298 million, or $2.28 per share, a year earlier. Excluding one-time items, the company earned $2.58 per share, better than analysts' expectations of $2.49.

 

Its revenue surged about 24% to $1.73 billion from $1.4 billion a year ago . That beat market expectations of $1.66 billion.

 

Its online sales surged 92% during the Covid pandemic as many consumers preferred to relax and shop at home. The company said sales to women rose 19% and to men 17% in the quarter.

 

In North America, revenue increased 21%, while international sales jumped 47%.

 

It said direct-to-consumer sales nearly doubled to 52% of total sales in the quarter , compared with 33% a year earlier.

 

"We are still in the early stages of our growth, driven by exciting innovation," Chief Executive Calvin McDonald said in a statement.

 

Lululemon now expects first-quarter revenue of $1.1 billion to $1.13 billion, compared with analysts’ average estimate of $999.5 million, according to Refinitiv data.

 

The company called for revenue of $5.55 billion to $5.65 billion in fiscal 2021, compared with analysts’ average estimate of $5.42 billion.

 

But a further resurgence in the pandemic could lead to additional restrictions that dampen shopper demand and cause supply chain disruptions.

 

The company said that for now, it remains on track to achieve previously planned goals by 2023, including doubling men's and online sales and tripling international revenue.

 

Lululemon now also owns Mirror, the home fitness equipment maker, which provides a source of revenue growth beyond the pants , tops and fitness accessories it sells.

 

It said it plans to increase its investment in the startup, which generated $170 million in revenue in 2020, including results before Lululemon's $500 million acquisition.

 

As of Tuesday's close, Lululemon's shares have fallen about 8% so far this year. The company's market value is $41.3 billion.


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