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Lululemon customers so far 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 in the retailer’s still nascent men’s division.
It also raised its financial outlook for fiscal 2022, expecting the momentum in its business to continue in spite of broader economic headwinds, including red hot inflation and the snarled supply chain.
Lululemon, which caters to a more affluent customer, joins a group of retailers including Levi Strauss & Co., Nordstrom and Macy’s high-end Bloomingdale division that are luring shoppers with enough extra money to splurge on new clothes and accessories while prices are rising at rates last seen four decades ago. In late March, Lululemon said it would be raising prices on certain items to help 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 in particular was seen as a pandemic beneficiary, as people sought out stretchy pants and comfortable clothing to wear at home. But now, even 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 include footwear and skin-care products.
“Our product pipeline remains very strong and it’s the bedrock of the business,” McDonald said on a call with analysts.
Lululemon sees sales in fiscal 2022 in a range of $7.61 billion to $7.71 billion, up from a prior forecast of $7.49 billion to $7.62 billion. Analysts were looking for $7.54 billion, according to Refinitiv data.
The company expects to earn, on an adjusted basis, between $9.35 and $9.50 per share, up from a prior range of $9.15 to $9.35. Analysts were looking for per-share earnings of $9.28.
Lululemon’s shares were little changed during extended 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 year earlier.
Lululemon’s revenue grew roughly 32% to $1.61 billion from $1.23 billion a year earlier.
Same-store sales, which track revenue online and at Lululemon stores open for at least 12 months, rose 28% from the prior year. Analysts had been looking for an increase of 20.4%, according to StreetAccount estimates.
Women’s sales grew 24% on a three-year basis, and men’s grew 30% versus 2019 levels, the company said.
For the second quarter, Lululemon expects revenue to be in 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 building, adjusted earnings per share are expected to be in the range of $1.82 to $1.87, ahead of analysts’ expectations for $1.77.
Regarding China, which is still facing Covid-related restrictions in some regions, McDonald said that roughly one-third of Lululemon’s 71 stores in the country were closed for a period of time in the latest quarter and into the second.
However, he said the company will continue to invest in China, viewing the softened demand as a short-term challenge. “Our brand momentum remains strong,” the CEO told analysts.
Lululemon shares are down about 23% year to date.
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Image and article originally from www.cnbc.com. Read the original article here.