Lululemon CEO Calvin McDonald Warns of Slow Start to 2024 in the U.S.

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Lululemon (LULU) Q4 2023 earnings topped estimates, but sales gains are seen slowing this year.

beat, but chief executive officer Calvin McDonald warned “there has been a shift in the U.S. consumer behavior of late, and we’re navigating what has been a slower start to the year.”“We view this as an opportunity to keep playing offense as we lean into investments that will continue our growth trajectory,” the CEO said. “Outside the U.S., our business remains strong in all our international markets.

McDonald said the company would continue to spend to boost its brand awareness in the U.S. with community-based events and larger brand campaigns. “I know we have an opportunity in this market,” he said. “Our sizing in particular, in 0 to 4, is something we’re chasing into. Color, where we had color, it performed well. And honestly, we just did not have enough — and both of these attributes over-indexed in the U.S….We’re going to continue to play offense in the market.

This is all a change of pace for Lululemon, which is more accustomed to powering through even when others in the fashion space struggle. Lululemon’s fourth-quarter net income jumped more than fivefold to $669.5 million from $119.8 million a year earlier, when the bottom line was pulled down by $442.7 million in chargesper share rose 20.2 percent to $5.29 from adjusted results the year before, coming in 29 cents above the $5 analysts projected, according to FactSet.

But Lululemon sees that growth rate slowing and is projecting sales gains this year of 11 to 12 percent. That puts the top line in a range of $10.7 billion to $10.8 billion, with the help of an extra week in the current fiscal year.

 

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