Earnings and comparable sales surpassed analysts’ average estimate in the company’s fiscal first quarter. For the full year, Lululemon now expects revenue to be as high as US$9.5 billion, compared with a prior estimate of as much as US$9.4 billion. Guidance for the second quarter also came in above analysts’ estimates.
The results point to ongoing strength for the brand, which appears to be sidestepping the softness that has hit other retailers. Lululemon shares jumped 12 per cent at 4:22 p.m. in extended New York trading. The stock has gained 2.5 per cent this year through Wednesday’s close, compared with a 9.9 per cent gain for the S&P 500 Index.
Lululemon has been working down bloated inventories since last year. It reported that levels were up 24 per cent from a year ago in the first quarter, an improvement from the 50 per cent year-over-year gain reported last quarter, though still higher than usual. Gross margin in the quarter surpassed the average analyst estimate.
The company said lower air freight and acceleration in Chinese sales contributed to the performance. Lululemon’s results stand out among other apparel retailers, which largely have reported comparable-sales declines in the first quarter and noted growing economic uncertainty. That experience hasn’t been across the board, however, with brands such as Abercrombie & Fitch and Urban Outfitters-owned Anthropologie also experiencing double-digit comparable sales growth, suggesting that consumers are still willing to spend on higher-priced apparel from popular brands.