Lululemon Soars After Beating Expectations in Q3 Earnings Report
The athletic apparel giant, Lululemon, surprised investors with its third-quarter results, surpassing expectations on both revenue and profit. The company’s shares skyrocketed over 8% in after-hours trading, driven by its impressive performance and raised full-year sales and profit forecasts for 2024.
Revenue and Earnings Beat Estimates
Lululemon reported revenue of $2.40 billion, exceeding analysts’ predictions of $2.36 billion. This marks an increase from the $2.20 billion reported in the same quarter last year. The company’s earnings per share (EPS) also beat estimates, reaching $2.87 compared to the expected $2.75. This represents a significant jump from the $2.53 EPS reported in the year-ago period.
Guidance for Q4 and Full-Year 2024
Looking ahead, Lululemon anticipates revenue of $3.48 billion-$3.51 billion in the fourth quarter, slightly below consensus estimates of $3.5 billion. The company expects EPS to fall between $5.56 and $5.64, lower than the anticipated $5.70. For the full year, Lululemon boosted its net revenue guidance to $10.45 billion-$10.49 billion, up from the prior range of $10.38 billion-$10.48 billion. Its forecast for EPS was also raised to $14.08-$14.16, higher than the previous range of $13.95-$14.15.
CEO Calvin McDonald Weighs In
“Our third-quarter performance demonstrates the enduring strength of Lululemon globally,” said CEO Calvin McDonald in the earnings release. “We’re pleased with the start to our holiday season and remain focused on accelerating our US business and growing brand awareness worldwide.”
Gross Margins and Stock Buyback Program
Gross margins improved sequentially, rising 150 basis points to 58.5%. The company also announced a $1 billion increase to its stock buyback program on December 3.
Challenges in North America
Despite the overall success, Lululemon continues to face challenges in North America, where sales growth declined once again. Same-store sales within the region fell 2%, following a 3% drop in the second quarter. However, international markets helped boost overall same-store sales, which increased 4%.
Analysts Weigh In
Heading into the report, Lululemon’s stock had been one of the worst performers in the S&P 500 this year, plummeting over 30%. Despite this, analysts remain optimistic about the company’s long-term fundamental story, citing increased short-level interest as a catalyst.
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