Individuals line as much as enter a retailer throughout Black Friday procuring at Style Shops of Chicago in Rosemont of Higher Chicago Space, Illinois, the USA, on Nov. 26, 2021.
Joel Lerner | Xinhua Information Company | Getty Pictures
Lululemon’s inventory gave up good points in prolonged buying and selling Thursday after the corporate slashed its gross sales expectations for Mirror, the at-home health gadget it acquired final yr.
The athletic attire maker reported fiscal third-quarter earnings and gross sales forward of analysts’ estimates, prompting it to spice up its full-year outlook.
Nonetheless, it stated some shopper demand over the vacations may need been pulled ahead, as shoppers kicked off their present shopping for earlier this yr. In consequence, its fourth-quarter outlook got here in lighter than some analysts had anticipated. Administration additionally cited provide chain points which have left some classes of products, reminiscent of outerwear, below stocked throughout key procuring days.
Lululemon shares had been just lately falling greater than 2% in after hours, having closed the day down 2.1%.
This is how Lululemon did within the three-month interval ended Oct. 31 in contrast with what analysts had been anticipating, based mostly on a Refinitiv survey:
- Earnings per share: $1.62 adjusted vs. $1.41 anticipated
- Income: $1.45 billion vs. $1.41 billion anticipated
Lululemon’s third-quarter internet revenue rose to $187.8 million, or $1.44 per share, from $143.6 million, or $1.10 per share, a yr in the past.
Excluding one-time gadgets, it earned $1.62 per share, forward of expectations for $1.41.
Gross sales rose about 30% to $1.45 billion from $1.12 billion a yr earlier. That was forward of expectations for $1.41 billion.
The enhance was largely pushed by Lululemon’s males’s enterprise, which grew 44% yr over yr. Gross sales in womenswear, the corporate’s core enterprise, had been up 25%. Lululemon has stated its plans to double its males’s division by 2023 are working manner forward of schedule.
Similar-store gross sales, which measure gross sales at shops open for at the least 12 months, rose 32%. In North America, gross sales had been up 28% yr over yr, whereas income climbed 40% internationally.
The corporate is happy with its early vacation season efficiency, stated Chief Government Calvin McDonald in an earnings launch. Customers have been spending cash on exercise attire reminiscent of leggings and sweat pants for themselves, but in addition as a present for others.
McDonald later instructed analysts on an earnings name that the retailer’s on-line gross sales on Thanksgiving Day this yr had been its highest in a single day on document.
Lowered outlook for Mirror
Final yr, as shoppers shifted from understanding on the gymnasium to understanding at residence, Lululemon made a $500 million bet on Mirror. But that bet is now making some investors weary.
On Thursday, Lululemon lowered its outlook for Mirror sales for the year to be between $125 million and $130 million, while previously it was looking for between $250 million and $275 million.
The company has opened shop-in-shops for the Mirror devices, which retail for $1,495, in about 200 Lululemon stores in the United States and Canada, to date.
“As you know, 2021 has been a challenging year for digital fitness,” McDonald said during a call with analysts. “We will not chase growth at any cost. We simply don’t need to.”
The same pressures have hit rival Peloton, which recently slashed its 2021 revenue outlook. The at-home fitness space has been flooded with competition, but many consumers are also now choosing to head back to gyms or boutique studios.
Mirror founder Brynn Putnam stepped down from her role as CEO of the connected fitness company, CNBC reported in September. A successor has yet to be named.
Still, Chief Financial Officer Meghan Frank commented that the company feels “well positioned for a strong end to 2021.”
For the fourth quarter, Lululemon expects revenue to range from $2.13 billion to $2.17 billion, and adjusted earnings per share between $3.25 and $3.32. Analysts had been looking for sales of $2.17 billion and earnings of $3.30 per share.
It raised its full-year revenue outlook to a range of between $6.25 billion and $6.29 billion. Previously, it expected revenue of $6.19 billion to $6.26 billion. Analysts had been forecasting sales of $6.27 billion.
It sees annual diluted earnings per share in a range of $7.38 to $7.45. After adjustments, it expects to earn between $7.69 and $7.76 per share. Analysts had been looking for full-year adjusted earnings per share of $7.51.
“There are some big weeks ahead,” McDonald told analysts. “We’re pleased with our position. We’re pleased coming out of November. We knew that we needed to have a strong start to the quarter, and we achieved that.”
As of Thursday’s market close, Lululemon shares are up about 20% year to date. The company’s market cap is nearly $52 billion.
Find the full earnings press release from Lululemon here.