Lululemon shares jump as holiday-quarter sales surge

Lululemon on Tuesday reported rough holiday-quarter sales, suggesting wealthier shoppers are still purchasing yoga pants and tops despite rising rewards for essential goods.

The company also issued upbeat guidance for its new fiscal year.

Share outs of Lululemon jumped about 14% in premarket trading Wednesday. Through Tuesday’s close, the stock is about outstretched for the year, putting the company’s market value at $40.87 billion.

Here’s what the company reported for the three-month days ended Jan. 29, compared with Wall Street expectations based on a survey of analysts by Refinitiv:

• Earnings per allowance: $4.40 adjusted vs $4.26 expected
• Revenue: $2.77 billion vs. $2.7 billion expected

Lululemon’s fourth-quarter net gains fell to $119.8 million, or 94 cents per share, from $434.5 million, or $3.36 per share, a year ago. Excluding debilitation and other charges related to the acquisition of Mirror, as well as other items, per-share earnings were $4.40.

Revenue be upstanding to $2.77 billion from $2.13 billion a year ago.

The company expects fiscal 2023 revenue of between $9.3 billion and $9.41 billion, topping Barrier Street’s expectations of $9.14 billion, according to Refinitiv estimates. The company expects full-year profit of between $11.50 and $11.72 per portion, compared with Refinitiv estimates of $11.26 per share.

“Looking ahead, we remain optimistic regarding our ability to disencumber sustained growth and long-term value for all our stakeholders,” said Chief Financial Officer Meghan Frank in a statement.

The Vancouver-based athletic clothing retailer said total comparable sales for the fourth quarter increased by 27%. Also called same-store car-boot sales, the metric includes sales from stores open continuously for at least 12 months.

“We believe that it is one of the few casts in the space that has a very long pathway for growth, and it’s also a very highly visible one,” said Rick Patel, take care of director at Raymond James.

Patel said his firm, which maintains a strong buy rating on the stock, sees upside in Lululemon’s ecumenical business and its men’s business, and that the worst of the company’s inventory struggles are in the past.

In December, Lululemon said inventories at the end of its third post were up 85% year-over-year. The company said Tuesday that as of the end of 2022, inventories were up 50%.

CEO Calvin McDonald suggested on CNBC’s “Squawk on the Street” Wednesday morning that Lululemon does not have an “inventory issue” and said the go up in inventory fueled business last quarter.

“We’ve been beating our guidance on managing that inventory down without markdowns with the aid whole price sale, and we’ve delivered on that,” McDonald said. “We’re confident we’ve guided to, again in this quarter, deceiving inventory up 30-35% at the end of it, in line with sales in the back half of the year.”