Investing.com – Lululemon Athletica lifted its full-year earnings guidance Wednesday after it reported fiscal first-quarter results that topped Wall Street expectations, as solid sales in China boosted returns.
For 2024, the Canadian company known for its pricey leggings said diluted earnings per share are now expected to be in the range of $14.27 to $14.47, up from a prior estimate of $14.00 to $14.20 per share, while its revenue forecast of $10.70 billion to $10.80 billion was maintained.
Lululemon earnings per share of $2.54 and revenue of $2.21 billion. Wall Street had anticipated EPS of $2.38 on revenue of $2.19 billion.
Comparable sales increased 6%, or 7% in constant dollar terms, underpinned by “strong momentum in our international markets,” the company noted.
Strength in mainland China, where comparable sales jumped by 33% versus the year-ago period, offset a flat top-line performance in the Americas. Analysts cited by Reuters noted that Lululemon has been building up its presence in China to take advantage of relatively muted domestic competition and counteract sluggish demand among inflation-squeezed U.S. shoppers.
“From a China standpoint, we’re very pleased with our business in that market,” said Lululemon Chief Financial Officer Meghan Frank in a call with analysts. “I would say from a competitive landscape, we continue to see strong business on our side, definitely closely monitoring that environment. But we’re really still early in our growth journey there, and no concerns at this point in time.”
Chief Executive Calvin McDonald added that Lululemon is in a “more optimal” position regarding its inventory levels heading into the second half of 2024. However, he flagged the firm has not had a big enough inventory of fresh colors in its key women’s leggings business, calling it a “missed opportunity.”
Shares in Lululemon (NASDAQ:) gained more than 8% in premarket trade following the report. “[I]nvestors were looking for domestic [U.S.] declines foretelling much larger problems, the absence of which, coupled with clean inventory, likely took the shares higher,” analysts at BMO Capital Markets said in a note to clients.
For the second quarter, the group is projecting earnings in a range of $2.92 to $2.97 share on revenue between $2.40 billion to $2.42 billion, compared with Wall Street consensus forecasts of $3.03 and $2.45 billion, respectively.
Yasin Ebrahim contributed to this report.
