The Yahoo Finance Live team discusses a jump in Lululemon's stock following positive Q4 earnings.
Video Transcript
SEANA SMITH: We want to get to some breaking news, Lululemon releasing its fourth quarter results. Josh Schafer, what do you have?
JOSH SCHAFER: Yes, so Lululemon, we've got a beat on the top and bottom line here for the last quarter. The fourth quarter revenue coming in at 2.77 billion. That is against estimates of 2.7 billion, and adjusted EPS coming at $44.40-- excuse me-- and that's against estimates of $4.26. Now you see that Q1 EPS, the guidance there also came in above Wall Street estimates.
And then two key numbers here also forward-looking, guys. Full year net revenue coming in at 9.3 to 9.4 billion. That's above the estimate, the Street estimate for 9.1 billion. And then full year EPS coming in at a guided range of $11.50 to $11.72. That comes in, again, above the Street estimate of $11.27 for full year EPS.
But one key number we were talking about going into this report is that gross margin number. And that number did miss Street estimates for the fourth quarter. So the fourth quarter gross margin number coming in at 55.1%. The Street had been looking for 57.1%. So 55 versus 57 there. That's something that I'm sure will come up on the call and I'm interested to hear more about.
SEANA SMITH: Yes, certainly. And when you take a look at that inventory number coming in below the Street's expectations, obviously, you would think that's a good sign here for Lululemon as the company tries to get more of a control over their excess inventory. It looks at least for now that the Street is looking past that gross margin miss. And a lot of the focus in this report is on these results, but also maybe more so on that guidance number, when you take into account that revenue, the outlook here, full year net revenue outlook, 9.3 billion, 9.41 billion, beating the Street's estimates by wide margins. The Street was looking for 9.1 billion.
And I think this really shows a couple of things. One, that the consumer is still spending, that Lululemon is able, at least up until this point, to maybe navigate what is a very challenging time for this company, and inventory was a big concern, like you said, going into this. Lots of questions about whether or not they were going to be able to get a handle on that, given their sales structure and how they approach sales. It looks like, though, at least they made maybe enough improvement on that to satisfaction.
JOSH SCHAFER: Well, Lulu's been the kind of company that grows on a continuously growing net sales number, right? So to see that number continually going up, I think is what people are excited about here, to some extent. When you think about Lulu, they're not as promotional as some other retail companies. So people are wondering, can they continue to sell and offload that inventory without promoting too much? You're seeing a little bit of that margin pressure, but I think the big thing here, Dave, is to just continue to see that revenue number potentially growing into next year, basically saying if demand-- if maybe demand is hurting in some places, but maybe not for the high end consumer that Lululemon sees.
DAVE BRIGGS: Right, and that's the thing. They're immune to a lot of other challenges to the other retailers that we talk about because their shoppers are fiercely loyal. They are that far high end shopper. Just look at this number. This is from a data number just out. Visits to Lululemon stores up 11% in February, while visits to sports apparel across the board down 7.6%. So that is a massive discrepancy, a massive difference between Lulu and everybody else in the category. Their consumers are not feeling the same pain as these other stores. As you can see, traffic continues to pick up.
Now, some attribute that to being more experiential in the stores because they do have a lot of activity, including yoga, in stores, but that number really tells the tale. Fascinating to see the inventory, getting a handle on that number as well.
SEANA SMITH: Yeah, exactly. And also another piece in this report that's pretty interesting, we talked about Lululemon and-- Lululemon Studio, excuse me, and their membership there, which is formerly known as Mirror. Well, the company actually launching a new app. It sounds like it's going to be launching in the summer of 2023. They're expanding the Lululemon Studio premium tier.
They're going to enable guests to access its digital fitness content via that new app. It's going to also be offered for a lower monthly fee. So we'll see what they expect in terms of traction, how often that will be used. But again, another source of revenue here for the company going forward. All right, Josh, great stuff. Thanks so much.
