Lululemon earnings beat estimates as upscale demand holds up
BNN Bloomberg
Lululemon Athletica Inc. jumped after posting better-than-expected profit and sales in the first quarter and projecting full-year results that outpaced estimates — a sign demand for the company’s pricey activewear is persisting despite emerging weakness among consumers.
Earnings and comparable sales surpassed analysts’ average estimate in the company’s fiscal first quarter. For the full year, Lululemon now expects revenue to be as high as US$9.5 billion, compared with a prior estimate of as much as US$9.4 billion. Guidance for the second quarter also came in above analysts’ estimates.
The results point to ongoing strength for the brand, which appears to be sidestepping the softness that has hit other retailers. Lululemon shares jumped 12 per cent at 4:22 p.m. in extended New York trading. The stock has gained 2.5 per cent this year through Wednesday’s close, compared with a 9.9 per cent gain for the S&P 500 Index.
Lululemon has been working down bloated inventories since last year. It reported that levels were up 24 per cent from a year ago in the first quarter, an improvement from the 50 per cent year-over-year gain reported last quarter, though still higher than usual. Gross margin in the quarter surpassed the average analyst estimate.
