Lululemon shares surge as vacation quarter gross sales soar

A Lululemon sign is seen at a mall in San Diego, California, November 23, 2022.

Mike Blake | Reuters

Lululemon on Tuesday reported strong sales in the holiday quarter, suggesting that wealthier shoppers are still buying yoga pants and tops despite rising prices for essential commodities.

The company also issued an upbeat forecast for the new fiscal year.

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Shares of Lululemon are up about 11% in after-hours trading following the report. As of Tuesday’s close, the stock was roughly flat for the year, putting the company’s market value at $40.87 billion.

Here’s what the company reported for the three-month period ended Jan. 29, compared to Wall Street expectations based on a poll of analysts by Refinitiv:

• Earnings per share: Adjusted $4.40 vs. $4.26 expected
• Revenue: $2.77 billion versus $2.7 billion expected

Lululemon’s fourth-quarter net income fell to $119.8 million, or 94 cents a share, from $434.5 billion, or $3.36 a share, a year ago. Excluding impairments and other charges related to the Mirror acquisition and other items, earnings per share were $4.40.

Revenue increased to $2.77 billion from $2.13 billion last year.

The company expects fiscal 2023 revenue of between $9.3 billion and $9.41 billion, beating Wall Street’s expectations of $9.14 billion, according to Refinitiv estimates. The company expects full-year earnings per share of between $11.50 and $11.72, compared to Refinitiv estimates of $11.26 per share.

“Looking ahead, we remain optimistic about our ability to create sustainable growth and long-term value for all of our stakeholders,” Chief Financial Officer Meghan Frank said in a statement.

The Vancouver-based sportswear retailer said total comparable sales rose 27% in the fourth quarter. Also known as same-store sales, the metric includes sales from stores that have been open for at least 12 consecutive months.

“We believe it’s one of the few companies in the industry that has a very long growth path, and it’s a very visible one, too,” said Rick Patel, managing director at Raymond James.

Patel said his firm, which maintains a Strong Buy rating on the stock, sees upside in Lululemon’s international business and men’s business, and that the company’s worst camp struggles are in the past.

In December, Lululemon announced that inventories at the end of the third quarter were up 85% year over year. The company said on Tuesday that inventories were up 50% by the end of 2022.