Lululemon posts strong quarter amid global growth; raises forecast
Lululemon Athletica Inc. continued its momentum in the second quarter and once again lifted its full-year guidance despite a “dynamic operating environment.”
The athletic and active lifestyle apparel retailer’s revenue was boosted by strong international growth, particularly in China, where sales jumped 61%. Sales in North America rose 11%.
On the company's earnings call, executives said that Lululemon is now targeting 55 net new stores by the end of the year, which is up from its previous estimate of about 50.
Lululemon reported net income of $341.6 million, or $2.68 a share, for the quarter ended July 30, compared with $289.5 million, or $2.26 a share, in the same quarter last year. Adjusted earnings per share were $2.20.
Revenue rose 18% to $2.2 billion, compared with $1.87 billion in the prior-year quarter, or 20% on a constant dollar basis.. Analysts had expected sales of $9.51 billion. Net revenue increased 11% in North America, and increased 52% internationally.
Comparable store sales increased 7%.
“Our Q2 results highlight the ongoing strength of the business amid a dynamic operating environment,” stated CEO Calvin McDonald. “Our continued ability to gain market share and bring new customers into the brand illustrates the significant runway ahead for Lululemon.”
In 2022, retailer unveiled its Power of Three ×2” growth plan, which calls for a doubling of its business from 2021 net revenue of $6.25 billion to $12.5 billion by 2026. The key pillars of the plan are product innovation, customer experience and market expansion. Upcoming plans include a new women’s collection and an expanded array of outerwear vests, jackets and down items. Men’s footwear is expected to launch in 2024.
“Our performance remained strong in Q2 as both revenue and EPS exceeded our expectations,” said CFO Meghan Frank. “Our ongoing momentum is a reflection of our portfolio approach to growth, differentiated business model, and innovative product assortment. We are excited about our opportunities in the second half of the year and look forward to continue delivering on our Power of Three ×2 growth plan."
Lululemon is expecting full-year sales of $9.51 billion to $9.57 billion, above its previous forecast in June of $9.44 billion to $9.51 billion. The company forecast earnings per share of $12.02 to $12.17, up from its prior range of $11.74 to $11.94.
The company opened 10 net new company-operated stores during the
second quarter, including its first in Thailand, ending with 672 stores.