Lululemon earnings beat estimates, but shares fall on weaker-than-expected outlook

Key Points
  • Lululemon's quarterly earnings and sales top analysts' estimates.
  • The company says same-store sales were up 17% during the latest period.
  • But a fourth-quarter outlook comes up short of Wall Street expectations.
Pedestrians seen walking past Canadian athletic apparel retailer Lululemon in Shanghai.
Alex Tai | SOPA Images | LightRocket | Getty Images

Lululemon on Wednesday reported quarterly earnings and sales that topped analysts' estimates, as more shoppers around the world picked up its yoga pants and sports bras. And its men's business continued to grow.

But its shares fell as much as 6% in after-hours trading on the news, as Lululemon's fourth-quarter outlook came in slightly below Wall Street expectations.

Lululemon now expects to earn between $2.10 and $2.13 per share during the holiday quarter, while analysts have been calling for earnings of $2.13 a share. The company said its outlook takes into account the fact there are six fewer shopping days between Thanksgiving Day and Christmas this year compared with last.

Here's how the company did during the period ended Nov. 3 compared with what Wall Street was expecting, based on Refinitiv data:

  • Earnings per share: 96 cents, adjusted, vs. 93 cents expected
  • Revenue: $916 million vs. $899.7 million expected
  • Same-store sales: up 17% vs. growth of 14.4% expected

The retailer said it reported double-digit growth in both its women's and men's businesses during the quarter, with men's total revenue growing 38%.

Net income grew to $126 million, or 96 cents a share, compared with $94.4 million, or 71 cents per share, a year ago. That was 3 pennies better than what analysts were calling for.

Net revenue rose 23% to $916.1 million from $747.7 million a year ago. That beat analysts' expectations for $899.7 million.

Sales online and at Lululemon stores open for at least 12 months were up 17%, on a constant currency basis, better than the 14.4% growth that analysts had forecast.

Lululemon earlier this week announced its Chief Operating Officer Stuart Haselden would be leaving, effective Jan. 10. He will become the CEO at privately held luggage company Away.

Competing with the likes of Nike, Under Armour and Adidas, Lululemon has said it is targeting doubling its men's and online sales over the next five years while hitting annual revenue growth in the low teens during that time frame. It is also still planning to quadruple international revenues by 2023.

Some of Lululemon's growth initiatives include selling in more categories, such as personal care, and opening more experiential stores that have spaces for fitness classes and eateries. And it's testing a loyalty program in a handful of cities, which it plans to expand in 2020.

For the fourth quarter, Lululemon is now calling for revenues to fall between $1.32 billion and $1.33 billion, again missing a Wall Street forecast.

For the full fiscal year, it now expects revenues to fall within a range of $3.895 billion to $3.910 billion, up from its prior range of $3.73 billion to $3.77 billion.

CEO Calvin McDonald told analysts during a post-earnings conference call that Lululemon saw "record performance" during the Thanksgiving weekend. He said the retailer is "just getting started" on growing its nascent men's business.

Lululemon shares have skyrocketed more than 90% this year, making it one of the best-performing retailers on Wall Street. The stock before market close on Wednesday hit a fresh all-time, intraday high of $235.50. Lululemon has a market cap of about $30.4 billion.

Find the complete earnings press release here.

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