Pedestrians walk past a Lululemon store.
Scott Mill | CNBC
Lululemon Athletica Inc. on Thursday reported quarterly earnings and revenue that beat analysts’ expectations, as shoppers flocked to exercise gear even as rising prices hurt other retailers’ apparel sales.
The company also raised its outlook for the year. Shares rose about 9% in after-hours trading.
Here’s what the company reported compared to what Wall Street expected, 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 rose 23%, beating StreetAccount’s estimate of 17.6%. net sales rose 29% to $1.87 billion. The company said traffic remains strong both in stores and online, even as rising inflation tightens consumer spending.
Lululemon has a higher-income customer base that appears largely unhampered by inflationary pressures. However, other high-end retailers such as Nordstrom and Macy’s lowered their outlook this quarter on fears of slowing demand. Lululemon, on the other hand, has increased its guidance in two consecutive quarters.
“Despite the challenges around us in the macro environment, guest traffic to our stores and our e-commerce sites remains strong, which speaks to the strength of our multi-dimensional operating model,” Chief Financial Officer Meghan Frank said in a news release. release
Store traffic grew over 30%, and e-commerce traffic grew over 40%, executives said on Thursday’s earnings call. The company hopes to increase customer loyalty with a membership program launching soon.
The membership program was announced at the end of the first quarter. It has a free tier and a $39/month paid tier that give subscribers early access to product discounts and exclusive items, as well as invitations to in-person events.
The company said the traffic increases were not attributable to promotional programs or product declines.
“We haven’t changed our promotional cadence,” CEO Calvin McDonald said on the earnings call. “We have no plans to do this.”
Lululemon continued its brick-and-mortar expansion during the quarter, with 21 net new stores for a total of 600 locations.
Inventories rose 85% to $1.5 billion compared to the same period last year, but the company said it was “under-inventorized” at the time due to supply chain bottlenecks.
Retailers in general have had to deal with rising inventory levels as shoppers adjust their spending habits. Lululemon said Thursday it is confident the inventory level will help it boost sales during the holiday shopping season.
The company said it now expects 2022 revenue of between $7.865 billion and $7.940 billion, down from the range of $7.610 billion to $7.710 billion it reported last quarter. The company also raised its adjusted earnings-per-share outlook to a range of $9.75 to $9.90, from last quarter’s guidance of $9.35 to an adjusted $9.50.
The release also maintained the company’s long-term outlook of doubling net income to $12.5 billion from 2021 to 2026. The plan includes an expansion of its menswear, footwear and membership-based fitness classes business. When the plan was announced in the spring, some analysts were skeptical about Lululemon’s ability to achieve the lofty long-term goal.
Lululemon touted some early successes with the plan. It launched new footwear during the quarter, while its men’s business saw 27% growth. The company also reported growth in all countries in which stores are currently active.
Read the earnings release here.
