Pedestrians pass by a lululemon store.
Scott Mullin | CNBC
Lululemon Athletica Inc. Thursday reported quarterly earnings and profits that beat analyst expectations as shoppers stocked up on exercise equipment even as higher prices hurt apparel sales at other retailers Did.
The company also raised its outlook for the year. Shares rose about 9% in after-hours trading.
Here’s what the company reported compared to what Wall Street had expected, based on analyst research by Refinitiv.
- Earnings per share: $2.20, adjusted, versus $1.87 cents
- Revenue: $1.87 billion vs. $1.774 billion forecast
Same-store sales increased 23%, beating StreetAccount’s forecast of 17.6%.net sales $1.87 billion, up 29%. The company said traffic remained strong both in-store and online, even as rapid inflation weighed on consumer spending.
Lululemon has a high-income customer base and appears to be largely immune to inflationary pressures. Still, other luxury retailers such as Nordstrom and Macy’s have cut their forecasts for the quarter over concerns about slowing demand. Meanwhile, lululemon has boosted its guidance for the second straight quarter.
“Despite the challenges around us in the macro environment, guest traffic to our stores and e-commerce sites remains strong, which speaks to the strength of our multifaceted operating model. ‘ said Chief Financial Officer Megan Frank in a News.Release.
Store traffic has increased by more than 30% and e-commerce traffic has increased by more than 40%, executives said on Thursday’s earnings call. The company wants to increase customer loyalty with its upcoming membership program.
A membership program was announced at the end of the first quarter. With a free tier and a paid tier of $39/month, subscribers get early access to product drops, exclusive items, and invitations to in-person events.
The company said the increase in traffic was not due to promotional programs or price cuts on its products.
“We haven’t changed our promotional cadence,” CEO Calvin McDonald said on the earnings call. “We have no plans to do so.”
Lululemon continued its physical store expansion this quarter, opening 21 new stores for a total of 600 stores.
Inventories increased 85% to $1.5 billion compared to the same period last year, but the company said it was “understocked” at the time due to supply chain bottlenecks.
In general, retailers have had to deal with ballooning inventory levels as shoppers adjust their spending habits. Lululemon said Thursday it is confident inventory levels will help boost sales during the holiday shopping season.
The company expects 2022 revenue to be between $7.865 billion and $7.94 billion, up from a range of $7.61 billion to $7.71 billion announced last quarter. The company also raised its adjusted earnings per share guidance to a range of $9.75 to $9.90, from adjusted guidance of $9.35 to $9.50 in the prior quarter.
The release also maintains the company’s long-term outlook of doubling net revenue to $12.5 billion from 2021 to 2026. The plan includes expanding the menswear business, footwear and membership fitness classes. When the plans were announced in the spring, some analysts were skeptical about whether lululemon could meet its lofty long-term goals.
Lululemon touted the early success of the scheme. Launching new shoes during the quarter, men’s business saw his 27% growth. The company also reported growth in all countries where stores are currently open.
Click here for the financial results announcement.