Lululemon (LULU) Q2 2023 Earnings

A customer enters a Lululemon store in Corte Madera, California on June 02, 2023.

Justin Sullivan | Good pictures

Lululemon raised its full-year guidance Thursday after beating Wall Street’s estimates and posting an 18% improvement in both sales and profit in its fiscal second quarter.

The athletic apparel retailer now expects fiscal year sales of $9.51 billion to $9.57 billion, compared with a previous range of $9.44 billion to $9.51 billion.

Lululemon expects earnings of $12.02 to $12.17 per share for the year, compared with a previous range of $11.74 to $11.94.

For its current quarter, the retailer forecast earnings per share of $2.23 to $2.28 and $2.17 billion to $2.19 billion, in line with analysts’ expectations, according to Refinitiv.

Here’s how Lululemon did it Second fiscal quarter Compared to what Wall Street expected, according to Refinitiv’s survey of analysts:

  • Stock Gains: $2.68 vs. $2.54 expected
  • Revenue: $2.21 billion vs. $2.17 billion expected

The company’s net income for the three months ended July 30 was $341.6 million, or $2.68 per share, compared with $289.5 million, or $2.26 per share, a year earlier.

Sales rose to $2.21 billion, up 18% from $1.87 billion a year earlier.

The company easily beat Wall Street’s estimates, but same-store sales fell short of expectations: Comparable sales rose 11% in the quarter, beating estimates of 12.1%, according to the Street Account.

Lululemon has embarked on an ambitious growth plan — its “Power of Three x2” strategy — that aims to double its revenue to $12.5 billion in 2026, compared to $6.25 billion in 2021. To get there, the retailer is working to expand its brick-and-mortar footprint and double its men’s and direct-to-consumer revenue.

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Sales in the men’s category grew 15% in the quarter, and the retailer opened 10 new stores on a net basis, including its first in Thailand. At the end of the quarter, it had 672 stores globally.

It also serves to address persistent inventory shortages as year-on-year levels have steadily declined. In its second quarter, inventory rose 14% to $1.7 billion, up from $1.5 billion in the year-ago quarter.

Direct-to-consumer revenue rose 15%, but was a small part of Lululemon’s overall channel mix in the quarter. Direct-to-consumer sales accounted for 40% of Lululemon’s overall sales, up from 42% a year earlier.

Sales in North America were up 11%, while international revenue was up 52%.

Lululemon’s gross margin came in at 58.8%, compared to the 58.5% analysts expected, according to the Street Account.

Read the full earnings release Here.

This story is developing. Check back for updates.

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