Lululemon Powers On, Topping Estimates and Elevating Its Outlook

The financial realities of the second — with frightened customers, excessive inflation and excessive rates of interest — don’t appear to use to Lululemon Athletica Inc.

Shares of the buzzy energetic firm shot up 13.7 p.c on Thursday to $373.37 after it continued to develop quickly, topping first-quarter revenue and gross sales projections and elevating its outlook for the 12 months.

That places Lululemon’s market capitalization at about $47.5 billion, one of many highest valuations in all of style, though nonetheless lower than half of energetic chief Nike with a market cap of $159.3 billion. 

However the thought definitely appears for Lululemon to catch up.

The corporate’s earnings jumped 53 p.c to $290.4 million, or $2.28 a share — 32 cents forward of the $1.96 analysts projected, in response to FactSet. And revenues for the quarter ended April 30 jumped 24 p.c to $2 billion from $1.6 billion, practically $77 million above analysts’ expectations. 

Comparable-store gross sales elevated 17 p.c on a relentless forex foundation, displaying the corporate is rising new and present doorways. Lululemon opened 83 shops over the previous 12 months for a complete of 662 places.

Chief government officer Calvin McDonald burdened the significance of these shops — and the communities they anchor — to the Lululemon mannequin on a convention name with analysts.   

McDonald stated the corporate ramped its neighborhood occasions again to pre-pandemic ranges and not too long ago revealed its Additional Initiative that includes an ultramarathon for girls on Worldwide Ladies’s Day subsequent March. 

The model additionally connects with its Lululemon Studio app — which grew out of the corporate’s acquisition of Mirror, which proved to be a uncommon stumble and led to a $443 million write off final quarter. 

“We view our neighborhood mannequin as one in all our greatest aggressive benefits with connection factors throughout each the bodily and digital, our ecosystem powered by membership helps our management place in creating and cultivating omni-guest relationships,” McDonald stated. “We interact with company in methods which are extra than simply transactional by creating deeper connections and extra holistic relationships. This in flip builds our model consciousness, drives purchases and contributes to our robust monetary efficiency.”

McDonald argued that the drivers of the corporate’s enterprise are each distinctive and secure and embrace a direct to shopper omni working mannequin, product innovation and flexibility with seems to be that may be worn for each exercises and work. 

A variety of manufacturers have related claims, however are matching Lululemon’s outcomes. 

“If we zoom out, the drivers of our enterprise pre, throughout and publish the pandemic are nonetheless very related in the present day,” McDonald stated. “That’s the significance of product versatility because it pertains to attire, company residing an energetic and wholesome life-style, comfort anticipated by our company — which actually speaks to our energy in an omni working mannequin that we’ve been investing in for a few years — after which lastly concentrate on each bodily, psychological and social well-being all supporting the model positioning.” 

It appears all of that provides as much as extra for Lululemon. 

The corporate boosted its outlook for the 12 months and is now searching for earnings per share starting from $11.74 to $11.94, up from the $11.50 to $11.72 projected in March. Likewise, the income projection crept as much as a spread of $9.44 billion to $9.51 billion, up from $9.3 billion to $9.41 billion.