Lululemon strong in Q3; upbeat about holiday
Some other players in the sports and athleisure market may be having a rough time of it these days, but Lululemon Athletica Inc. is not one of them.
The maker of yoga wear and other specialty apparel raised its forecast for the year after easily topping analysts' estimates for the third quarter, fueled by strong digital growth. Lululemon's net revenue increased 14% to $619.0 million in the quarter ended Oct. 29.
Total same-store sales increased 8%, Comp sales surged 26% in the direct channel and 2% in stores.
The company reported net income of $59 million and earnings per share of $0.43 for the quarter, down from $68 million a year earlier. Excluding the impact of the Ivivva restructuring (the company announced in June it was closing most of its Ivivva kids stores), adjusted earnings per share would have come in at $0.56. Analysts had expected adjusted earnings of 52 cents a share on sales of $610 million, with a comp rise of 5.3%.
Kevin Wathey, a consultant at GlobalData Retail, commented that the strength of Lululemon's bottom line is mostly due to its ability to resist the temptation of excessive discounting -- even in a market that has become steadily more promotional.
"In our view, this is made possible by the fact that Lululemon, unlike so many of its rivals, has a line-up of products that people want and for which they are prepared to pay full price," he said. "Constant innovation and a laser-like focus on functionality and quality are central to this. Complementing the product proposition are Lululemon's efforts to foster loyalty. The company has long understood the power of creating a sense of community, and we are encouraged to see it extending its efforts in this area."
Lululemon said that its holiday season was off to a great start, with the company experiencing its highest traffic and largest sales ever on Black Friday and on Cyber Monday. It raised its forecasts for its profit and revenue for its fiscal year. It now expects adjusted earnings of $2.45 to $2.48 a share, up from a prior forecast of $2.35 to $2.42 a share. Revenue is expected in a range between $2.59 billion and $2.61 billion, up from $2.55 billion to $2.56 billion.
The strength of our Q3 earnings supports our unique position as the global brand defining an active, mindful lifestyle," said Laurent Potdevin, Lululemon CEO. "I'm grateful for the enthusiasm I see every day across our collective as we remain on our path to delivering $4 billion in revenue in 2020."
Lululemon also announced that its board of directors has approved a new stock repurchase program for up to $200 million.
The maker of yoga wear and other specialty apparel raised its forecast for the year after easily topping analysts' estimates for the third quarter, fueled by strong digital growth. Lululemon's net revenue increased 14% to $619.0 million in the quarter ended Oct. 29.
Total same-store sales increased 8%, Comp sales surged 26% in the direct channel and 2% in stores.
The company reported net income of $59 million and earnings per share of $0.43 for the quarter, down from $68 million a year earlier. Excluding the impact of the Ivivva restructuring (the company announced in June it was closing most of its Ivivva kids stores), adjusted earnings per share would have come in at $0.56. Analysts had expected adjusted earnings of 52 cents a share on sales of $610 million, with a comp rise of 5.3%.
Kevin Wathey, a consultant at GlobalData Retail, commented that the strength of Lululemon's bottom line is mostly due to its ability to resist the temptation of excessive discounting -- even in a market that has become steadily more promotional.
"In our view, this is made possible by the fact that Lululemon, unlike so many of its rivals, has a line-up of products that people want and for which they are prepared to pay full price," he said. "Constant innovation and a laser-like focus on functionality and quality are central to this. Complementing the product proposition are Lululemon's efforts to foster loyalty. The company has long understood the power of creating a sense of community, and we are encouraged to see it extending its efforts in this area."
Lululemon said that its holiday season was off to a great start, with the company experiencing its highest traffic and largest sales ever on Black Friday and on Cyber Monday. It raised its forecasts for its profit and revenue for its fiscal year. It now expects adjusted earnings of $2.45 to $2.48 a share, up from a prior forecast of $2.35 to $2.42 a share. Revenue is expected in a range between $2.59 billion and $2.61 billion, up from $2.55 billion to $2.56 billion.
The strength of our Q3 earnings supports our unique position as the global brand defining an active, mindful lifestyle," said Laurent Potdevin, Lululemon CEO. "I'm grateful for the enthusiasm I see every day across our collective as we remain on our path to delivering $4 billion in revenue in 2020."
Lululemon also announced that its board of directors has approved a new stock repurchase program for up to $200 million.