Financial transaction

Lululemon (LULU) Q1 2022 Earnings Beat Estimates

So far, Lululemon customers aren’t balking at higher prices on the retailer’s leggings and sports bras, chief executive Calvin McDonald said Thursday.

The sportswear maker reported fiscal first-quarter profits and revenue that beat Wall Street expectations, boosted by double-digit growth online and in the retailer’s still-nascent menswear division.

It also raised its financial outlook for fiscal 2022, expecting its business momentum to continue despite broader economic headwinds, including searing inflation and a struggling supply chain.

Lululemon, which caters to a more affluent clientele, joins a slew of retailers including Levi Strauss & Co., Nordstrom and Macy’s upscale Bloomingdale division that are luring shoppers with enough extra cash to splurge on new clothes and accessories as prices rise at rates last seen four decades ago. At the end of March, Lululemon announced that it would increase the prices of certain items to help offset higher raw material, labor and air freight costs.

Lululemon in particular was seen as a beneficiary of the pandemic as people sought stretchy pants and comfortable clothes to wear at home. But now, even as Americans leave their homes to return to offices and social outings, they are still buying so-called sports leisure items. Lululemon has also expanded its assortment more recently to include shoes and skincare products.

“Our product pipeline remains very strong and that’s the foundation of the business,” McDonald said in a call with analysts.

Lululemon is forecasting fiscal 2022 sales in the range of $7.61 billion to $7.71 billion, down from an earlier forecast of $7.49 billion to $7.62 billion. Analysts were looking for $7.54 billion, according to Refinitiv data.

The company expects to earn, on an adjusted basis, between $9.35 and $9.50 per share, up from a previous range of $9.15 to $9.35. Analysts were looking for earnings per share of $9.28.

Lululemon shares rose more than 1% in extended trading.

This is how Lululemon made in its first fiscal quarter compared to what Wall Street expected, based on Refinitiv data:

  • Earnings per share: $1.48 vs $1.43 expected
  • Revenue: $1.61 billion vs. $1.53 billion

The retailer reported net income in its first fiscal quarter of $190 million, or $1.48 per share, compared to net income of $145 million, or $1.11 per share, a year earlier .

Lululemon’s revenue rose about 32% to $1.61 billion from $1.23 billion a year earlier.

Same-store sales, which track revenue online and at Lululemon stores open for at least 12 months, were up 28% year over year. Analysts were expecting a 20.4% increase, according to StreetAccount estimates.

Women’s sales are up 24% over three years and men’s sales are up 30% from 2019 levels, the company said.

For the second quarter, Lululemon expects revenue to be between $1.75 billion and $1.78 billion, beating analysts’ expectations of $1.71 billion.

Excluding the gain on the sale of an administrative office building, adjusted earnings per share are expected to be between $1.82 and $1.87, ahead of analysts’ expectations of $1.77.

Regarding China, which still faces Covid-related restrictions in some regions, McDonald’s said about a third of the 71 Lululemon stores in the country were closed for some time in the last quarter and in the second. .

However, he said the company would continue to invest in China, seeing slowing demand as a near-term challenge. “Our brand momentum remains strong,” the CEO told analysts.

Lululemon shares are down about 23% year-to-date.