Lululemon Q1 sales surge 24%; raises full-year outlook
Lululemon Athletica Inc. maintained momentum during its first quarter, reporting better-than-expected sales and earnings.
The athletic apparel retailer reported net income of $290.4 million, or $2.28 per share, for the quarter ended April 30, compared with $190 million, or $1.48 per share, in the year-ago period. Analysts had expected earnings of $1.28 a share.
Net revenue increased 24% to $2.0 billion, ahead of estimates for $1.93 billion. Net revenue increased 17% in North America. Revenue rose 60% internationally, helped by the reopening of China after COVID restrictions.
Total comparable sales increased 14%. Comparable store sales increased 13%. Direct to consumer net revenue increased 16%, and represented 42% of total net revenue, down from 45% in the year-ago period.
In May, Lululemon announced the launch of an initiative designed to put a spotlight on female athletes. Called “Further,” the initiative will culminate in a six-day, "first-of-its-kind" ultramarathon for women that will begin on International Women’s Day, March 8, 2024.
“We are pleased with our solid start to the year, delivering strong financial performance and continued momentum,” stated CEO Calvin McDonald. “Our results reflect the strength of our guest relationships, our innovative products and how our brand resonates across the globe. This year we celebrate our 25th anniversary, and our community-based model remains one of our biggest competitive advantages.”
McDonald said the company remains on track to deliver on 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. The strategy includes a plan to double men's, double direct to consumer and quadruple international net revenue relative to 2021.
Lululemon ended the first quarter of 2023 with $950.6 million in cash and cash equivalents. Thr capacity under its committed revolving credit facility was $393.5 million.
“A meaningful acceleration in our China sales trend, coupled with lower air freight, contributed to our better than planned financial performance,” stated CFO Meghan Frank. “We are pleased with our momentum heading into the second quarter and for the full year as reflected in our revised outlook for FY23."
For 2023, the company expects net revenue to be in the range of $9.440 billion to $9.510 billion, representing growth of approximately 17%, up from a previous range of $9.31 billion to $9.41 billion.. Diluted earnings per share are expected to be in the range of $11.74 to $11.94 for the year, compared with a prior range of $11.50 to $11.72.
For the second quarter of 2023, the company expects net revenue to be in the range of $2.140 billion to $2.170 billion, representing growth of approximately 15%.
Lululemon opened seven net new company-operated stores during the first quarter, ending with 662 stores.