Lululemon (LULU) delivered strong third-quarter earnings on Thursday, surpassing Wall Street expectations and boosting its full-year forecast, driving a 16% rally in its stock on Friday.
Key Results:
- Revenue: $2.4 billion, up from $2.2 billion in Q3 2023, beating analyst estimates of $2.36 billion.
- Earnings per Share: $2.87, ahead of estimates at $2.75 and last year’s $2.53.
- Full-Year Outlook: Raised revenue guidance to $10.45-$10.49 billion and EPS forecast to $14.08-$14.16.
Despite international growth and improved margins (up 150 basis points to 58.5%), Lululemon faces challenges in North America, where same-store sales dropped 2%, extending a decline from the prior quarter.
Looking Ahead:
CEO Calvin McDonald expressed optimism about improving North American sales in 2024 while focusing on global expansion and brand growth. The company also announced a $1 billion stock buyback, signaling confidence in long-term performance.
However, increased competition from brands like Alo and Vuori remains a concern, especially as Lululemon heads into the holiday season.