Lululemon Q4 tops Street, expects ‘modest’ growth; to enter several new countries
Lululemon Athletica Inc. reported better-than-expected fourth-quarter earnings and revenue but provided a disappointing outlook as economic concerns weigh on customers.
On the earnings call, CEO Calvin McDonald said growth in North America would be “modest.” He cited a survey that the company recently conducted in conjunction with Ipsos which found that consumers are spending less due to increased concerns about inflation and the economy.
“This is manifesting itself into slower traffic across the industry in the U.S. in quarter one, which we are experiencing in our business as well,” McDonald told analysts.
McDonald added that “the external environment remains dynamic, and there continues to be considerable uncertainty driven by macro and geopolitical circumstances.”
“That being said, we remain focused on what we can control... and we expect to see modest growth in U.S. revenue for the full year of 2025,” he told analysts.
Stores
McDonald said that Lululemon will continue to open stores in existing markets and enter several new countries this year, including Italy as a new company operated market. It will enter Denmark, Belgium, Turkey, and the Czech Republic under a franchise model.
“Stores remain an important part of our growth story,” he said. “Not only are they highly productive, but they are also hubs in our local communities and allow us to engage directly with our guests, which provides us with another important competitive advantage.”
Fourth Quarter
Lululemon reported earnings of $6.14 per share for the quarter ended Feb. 2, topping anlaysts estimates of $5.85 per share.
Net revenue increased 13% to $3.6 billion. Analysts had expected revenue of $3.58 billion. For the full year, net revenue crossed the $10 billion mark for the first time, increasing 10% to $10.6 billion.
Same-store sales rose 3%, but were flat in the Americas region. International same-store sales jumped 20%.
“Our fourth quarter results exceeded our expectations as we continued to introduce more newness and innovation into our product assortment," McDonald stated in the earnings release. "As we begin 2025, we remain focused on executing on our Power of Three ×2 growth plan and delivering an exciting pipeline of innovation and brand activations for our guests and communities."
Lululemon’s “Power of Three ×2” growth plan calls for a doubling of the business from 2021 net revenue of $6.25 billion to $12.5 billion by 2026. The key pillars of the plan are product innovation, guest experience and market expansion.
For the first quarter, Lululemon expects earnings per share in the range of $2.53 to $2.58, missing analysts’ expectations of $2.72. It expects full-year earnings per share in the range of $14.95 to $15.15, also below Street expectations.
The company opened 18 net new company-operated stores during the fourth quarter, ending with 767 stores.
