lululemon on Thursday reported holiday earnings that beat expectations, but the sportswear retailer's guidance fell short of estimates as its growth in North America stalls.
Here's how the company fared in its fiscal fourth quarter compared to what Wall Street expected, according to a survey of analysts by LSEG, formerly known as Refinitiv:
- Earnings per share: $5.29 vs. $5.00 expected
- Revenue: $3.21 billion vs. $3.19 billion expected
The company's reported net income for the three-month period ended Jan. 28 was $669.5 million, or $5.29 per share, compared with $119.8 million, or 94 cents per share. action, from the previous year.
Sales rose to $3.21 billion, up about 16% from $2.77 billion a year earlier.
Shares fell about 10% in extended trading on Thursday.
Like its peers, Lululemon has been grappling with uncertain demand and a slowdown in discretionary spending that has hit the apparel sector particularly hard. Investors have watched how Lululemon is performing in North America, its largest region by sales, as it beats tougher comparisons from the previous year and competes with consumers who choose experiences over products like clothing and shoes.
During the quarter, sales increased 9% in the Americas, compared to 29% growth in the same period a year ago. While Lululemon continues to grow in the region, the pace has slowed significantly as Lululemon focuses on expanding internationally.
Meanwhile, international sales grew a reported 54%, with sales in China growing 78% and 36% in the rest of Lululemon's markets.
Comparable sales rose 12% during the quarter, just shy of the 12.3% increase analysts were expecting, according to StreetAccount.
For the current quarter, Lululemon expects net revenue to be between $2.18 billion and $2.2 billion, representing growth of 9% to 10%. Analysts were expecting a forecast of $2.25 billion, or 12.5% growth, according to LSEG.
It expects diluted earnings per share to be between $2.35 and $2.40, below the $2.55 analysts expected, according to LSEG.
For the full year, it expects sales to be between $10.7 billion and $10.8 billion, compared with estimates of $10.9 billion, according to LSEG.
It anticipates diluted earnings per share to be between $14 and $14.20 for the year, compared to estimates of $14.13, according to LSEG.
“As you have heard from others in our industry, there has been a shift in American consumer behavior lately and we are navigating what has been a slower start to the year in this market,” CEO Calvin McDonald said in a call. with analysts on Thursday. “We view this as an opportunity to continue playing offense while leaning toward investments that will continue our growth trajectory. Outside of the U.S., our business remains strong, and all of our international markets are in Canada.”
McDonald added that both traffic and conversions are down in the US. He attributed this to a lack of products in sizes zero to four, key sizes for the US customer base, and a lack of enough colorful items.
Lululemon has long been one of the leaders in the women's activewear market, but the Vancouver-based company faces more competition than ever. New entrants like Alo Yoga and Vuori have been chipping away at Lululemon's market share, and it has had to work harder to differentiate itself in the most crowded category.
The retailer has been working to expand its footwear offerings and grow its men's business. During the quarter, he opened his first men's store in Beijing, a key growth market for the company. In February, it unveiled its first men's shoe, CityVerse, and plans to release new running styles for both men and women, as performance sneakers remain a bright spot in an otherwise depressed footwear market. stagnant.
Heading into the holidays, McDonald said Black Friday was the “biggest day” in the company's history and that he was “encouraged” by the trends he was seeing at the start of the season. But the retailer's outlook for the Christmas quarter came in slightly below analysts' expectations.
In January, it increased that guidance after seeing sales “balanced across channels, categories and geographies,” CFO Meghan Frank said in a news release.
Read the full earnings release here.
