Lululemon Soars on Strong Outlook as Leisure Wear is a Hit
By Dhirendra Tripathi
Investing.com – Lululemon Athletica (NASDAQ:LULU) stock surged 7.5% in premarket trading Wednesday after the company issued a strong forecast for the year, indicating sticky demand for its athletic wear.
The company benefited immensely in the last two years as people preferred its comfortable and casual clothing to manage both office and domestic chores during lockdowns. That demand isn’t weakening as people focus on health and general well-being more than they ever did.
For the year, the company expects revenue to be $7.49-7.61 billion. Diluted profit per share is seen at $9.25 at the midpoint of its guidance range.
The company crossed $6 billion in annual revenue for the first time while net revenue in the fourth quarter through January 30 rose 23% to $2.1 billion.
It was up 21% in North America and 35% internationally despite many of its stores operating for fewer hours in the last quarter.
Like most other companies, LULU continues to see cost pressures in labor, raw materials, and transportation. As a result, prices hikes will follow, Reuters quoted Chief Executive Officer Calvin McDonald as telling analysts.
"We are taking modest selective price increases over the course of the year... It's a very small portion of our styles that are impacted... this will help offset some of the pressure we're seeing on average unit cost”.
The company closed the year with 49% more inventories in dollar terms and 33% on a number of units basis, suggesting tight control over stocks in an environment of supply chain issues.
In the current quarter, net revenue is seen at $1.54 billion at the midpoint of its guidance range. Diluted EPS is expected to be $1.38-1.43 for the quarter.
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