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Lululemon Sales Bonanza Gains Steam as New CEO Takes the Reins

Sandrine Rastello
 

Lululemon Athletica Inc. raised its full-year revenue and profit projections after once again beating sales forecasts in the second quarter. It’s a sign that Chief Executive Officer Calvin McDonald clearly has the wind at his back as he takes over.

Key Takeaways

  • The new forecasts replace estimates that analysts had described as conservative. They also bring the yogawear maker closer to its goal of $4 billion in revenue for 2020.
  • The digital business is thriving. With a 47 percent percent jump in e-commerce sales in constant currency, the Vancouver-based company is cashing in on its revamped website and direct-marketing efforts. It’s planned a new distribution center in the Toronto region to better address orders from the east coast.
  • Shares rose as much as 8.2 percent to $148.27 in late trading. They have gained 74 percent this year through Thursday’s close, reflecting investors’ confidence in the company’s plan to accelerate e-commerce revenue growth, attract more male shoppers and expand overseas.
  • McDonald, a Canadian who most recently served as a top executive at makeup chain Sephora, joined the company earlier this month.
  • Company says experiments with new store formats also helped boost brick-and-mortar sales.
Second-quarter results and outlook:
  • Sees 3Q net revenue $720.0 million to $730.0 million, estimate $707.8 million (range $688.0 million to $741.0 million) (Bloomberg data)
  • Sees FY net revenue $3.19 billion to $3.24 billion, estimate $3.09 billion (range $3.06 billion to $3.15 billion) (BD)
  • Sees FY EPS $3.45 to $3.53, estimate $3.25 (range $3.05 to $3.44) (BD)
  • 2Q adjusted EPS 71c, estimate 49c (range 45c to 58c) (BD)
  • 2Q total comparable sales including direct-to-consumer in constant currency +19%, estimate +9.5% (Consensus Metrix, average of 25 estimates)
  • 2Q gross margin +54.8%, estimate +52.2% (BD)
  • 2Q net revenue $723.5 million, estimate $667.4 million (range $658.0 million to $679.0 million) (BD)

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