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Lululemon (LULU) Q3 2021 earnings beat

Individuals line as much as enter a retailer throughout Black Friday procuring at Style Retailers of Chicago in Rosemont of Higher Chicago Space, Illinois, america, on Nov. 26, 2021.

Joel Lerner | Xinhua Information Company | Getty Pictures

Lululemon‘s inventory gave up features in prolonged buying and selling Thursday after the corporate slashed its gross sales expectations for Mirror, the at-home health machine it acquired final 12 months.

The athletic attire maker reported fiscal third-quarter earnings and gross sales forward of analysts’ estimates, prompting it to spice up its full-year outlook.

Nevertheless, it mentioned some shopper demand over the vacations might need been pulled ahead, as customers kicked off their reward shopping for earlier this 12 months. In consequence, its fourth-quarter outlook got here in lighter than some analysts had anticipated. Administration additionally cited provide chain points which have left some classes of products, comparable to outerwear, underneath stocked throughout key procuring days.

Lululemon shares have been lately falling greater than 2% in after hours, having closed the day down 2.1%.

This is how Lululemon did within the three-month interval ended Oct. 31 in contrast with what analysts have been anticipating, primarily based on a Refinitiv survey:

  • Earnings per share: $1.62 adjusted vs. $1.41 anticipated
  • Income: $1.45 billion vs. $1.41 billion anticipated

Lululemon’s third-quarter internet earnings rose to $187.8 million, or $1.44 per share, from $143.6 million, or $1.10 per share, a 12 months in the past.

Excluding one-time objects, it earned $1.62 per share, forward of expectations for $1.41.

Gross sales rose about 30% to $1.45 billion from $1.12 billion a 12 months earlier. That was forward of expectations for $1.41 billion.

The enhance was largely pushed by Lululemon’s males’s enterprise, which grew 44% 12 months over 12 months. Gross sales in womenswear, the corporate’s core enterprise, have been up 25%. Lululemon has mentioned its plans to double its men’s division by 2023 are working approach forward of schedule.

Similar-store gross sales, which measure gross sales at shops open for not less than 12 months, rose 32%. In North America, gross sales have been up 28% 12 months over 12 months, whereas income climbed 40% internationally.

The corporate is happy with its early vacation season efficiency, mentioned Chief Govt Calvin McDonald in an earnings launch. Consumers have been spending cash on exercise attire comparable to leggings and sweat pants for themselves, but in addition as a present for others.

McDonald later instructed analysts on an earnings name that the retailer’s on-line gross sales on Thanksgiving Day this 12 months have been its highest in a single day on report.

Lowered outlook for Mirror

Final 12 months, as customers shifted from understanding on the health club to understanding at house, Lululemon made a $500 million bet on Mirror. However that wager is now making some buyers weary.

On Thursday, Lululemon lowered its outlook for Mirror gross sales for the 12 months to be between $125 million and $130 million, whereas beforehand it was looking for between $250 million and $275 million.

The corporate has opened shop-in-shops for the Mirror units, which retail for $1,495, in about 200 Lululemon shops in america and Canada, so far.

“As you recognize, 2021 has been a difficult 12 months for digital health,” McDonald mentioned throughout a name with analysts. “We won’t chase development at any price. We merely needn’t.”

The identical pressures have hit rival Peloton, which recently slashed its 2021 revenue outlook. The at-home health house has been flooded with competitors, however many customers are additionally now selecting to go again to gyms or boutique studios.

Mirror founder Brynn Putnam stepped down from her function as CEO of the related health firm, CNBC reported in September. A successor has but to be named.

Nonetheless, Chief Monetary Officer Meghan Frank commented that the corporate feels “effectively positioned for a powerful finish to 2021.”

For the fourth quarter, Lululemon expects income to vary from $2.13 billion to $2.17 billion, and adjusted earnings per share between $3.25 and $3.32. Analysts had been in search of gross sales of $2.17 billion and earnings of $3.30 per share.

It raised its full-year income outlook to a spread of between $6.25 billion and $6.29 billion. Beforehand, it anticipated income of $6.19 billion to $6.26 billion. Analysts had been forecasting gross sales of $6.27 billion.

It sees annual diluted earnings per share in a spread of $7.38 to $7.45. After changes, it expects to earn between $7.69 and $7.76 per share. Analysts had been in search of full-year adjusted earnings per share of $7.51.

“There are some massive weeks forward,” McDonald instructed analysts. “We’re happy with our place. We’re happy popping out of November. We knew that we would have liked to have a powerful begin to the quarter, and we achieved that.”

As of Thursday’s market shut, Lululemon shares are up about 20% 12 months so far. The corporate’s market cap is almost $52 billion.

Discover the total earnings press launch from Lululemon here.

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