Lululemon’s Stock Rises 15% On Earnings Beat - InvestingChannel

Lululemon’s Stock Rises 15% On Earnings Beat

The stock of Lululemon (LULU) is up 15% after the Canadian retailer reported strong fiscal first-quarter earnings that beat Wall Street forecasts by a wide margin.

The Vancouver-based athletic apparel company also boosted its forward guidance, citing improving sales in China and lower freight costs.

Lululemon reported that its revenue rose 24% in the quarter to $2 billion U.S. versus $1.93 billion U.S. that was expected on Wall Street.

The company’s net income for the three months ended April 30 was $290.4 million U.S., or $2.28 U.S. per share, compared with $190 million U.S., or $1.48 U.S. a share a year earlier.

Lululemon, which sells high-end yoga pants, shoes, and other athletic wear, said that its revenue in China grew 79% in the quarter from a year ago as that country emerges from Covid-19 restrictions.

The retailer lifted its forward guidance, saying it now expects full-year revenue of $9.44 billion U.S. to $9.51 billion U.S., up from a previous estimated of $9.31 billion U.S. to $9.41 billion U.S.

Lululemon said its full-year profit should come in at $11.74 U.S. to $11.94 U.S. per share, compared with a previous forecast of $11.50 U.S. to $11.72 U.S.

Gross margins in fiscal Q1 increased 3.6 percentage points to 57.5%, driven by a reduction in airfreight expenses. That was above the 56.7% that analysts had expected.

By category, women’s sales rose 22%, men’s gained 17%, and accessories grew 67%.

The company said that it expects to open 50 new company-operated stores this year, 35 of which will be in international markets, mostly China.

Prior to the earnings bump, Lululemon’s stock had been up 2% on the year and trading at $328.35 U.S. per share.

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