Lululemon shares rise as retailer tops earnings estimates, raises sales forecast

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People line up to enter a store during Black Friday shopping at Fashion Outlets of Chicago in Rosemont of Greater Chicago Area, Illinois, the United States, on Nov. 26, 2021.

Joel Lerner | Xinhua News Agency | Getty Images

Lululemon‘s stock rose after the apparel market reported fiscal third-quarter earnings and sales ahead of analysts’ estimates, prompting it to raise its full-year outlook.

The company is pleased with its early holiday season performance, said Chief Executive Calvin McDonald in an earnings release. Shoppers have been spending money on workout apparel such as leggings and sweat pants for themselves, but also as a gift for others.

McDonald said the retailer’s online sales on Thanksgiving Day this year were its highest in a single day on record.

Its shares were recently up around 2% in after hours, having closed the day down 2.1%.

Here’s how Lululemon did in the three-month period ended Oct. 31 compared with what analysts were expecting, based on a Refinitiv survey:

  • Earnings per share: $1.62 adjusted vs. $1.41 expected
  • Revenue: $1.45 billion vs. $1.41 billion expected

Lululemon’s third-quarter net income rose to $187.8 million, or $1.44 per share, from $143.6 million, or $1.10 per share, a year ago.

Excluding one-time items, it earned $1.62 per share, ahead of expectations for $1.41.

Sales rose about 30% to $1.45 billion from $1.12 billion a year earlier. That was ahead of expectations for $1.41 billion.

The boost was largely driven by Lululemon’s men’s business, which grew 44% year over year. Sales in womenswear was up 25%.

Same-store sales, which measure sales at stores open for at least 12 months, rose 32%.

In North America, sales were up 28% year over year, while revenue climbed 40% internationally.

Chief Financial Officer Meghan Frank commented that the company feels “well positioned for a strong end to 2021.”

For the fourth quarter, Lululemon expects revenue to range from $2.13 billion to $2.17 billion, and adjusted earnings per share between $3.25 and $3.32. Analysts had been looking for sales of $2.17 billion and earnings of $3.30 per share.

It raised its full-year revenue outlook to a range of between $6.25 billion and $6.29 billion. Previously, it expected revenue of $6.19 billion to $6.26 billion. Analysts had been forecasting sales of $6.27 billion.

It sees annual diluted earnings per share in a range of $7.38 to $7.45. After adjustments, it expects to earn between $7.69 and $7.76 per share. Analysts had been looking for full-year adjusted earnings per share of $7.51.

As of Thursday’s market close, Lululemon shares are up about 20% year to date.

Find the full earnings press release from Lululemon here.

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