Lululemon Athletica on Thursday reported same-stores sales that missed expectations.
Lululemon Athletica on Thursday reported same-stores sales that missed expectations, but the yoga-themed apparel maker bumped its full-year forecast higher despite what executives characterized as a “dynamic operating environment” inhabited by inflation-wary consumers.
Lululemon LULU, +1.20% said it expected full-year sales of $9.51 billion to $9.57 billion. That’s a bit higher than a forecast given in June for $9.44 billion to $9.51 billion. The company forecast earnings per share of $12.02 to $12.17, up from a prior range of $11.74 to $11.94. Analysts polled by FactSet expected adjusted earnings per share of $11.93, on sales of $9.51 billion. For the second quarter, the company reported net income of $341.6 million, or $2.68 a share, compared with $289.5 million, or $2.26 a share, in the same quarter last year. Revenue rose 18% to $2.2 billion, compared with $1.87 billion in the prior-year quarter.Analysts polled by FactSet expected Lululemon to report adjusted earnings of $2.54 a share, on revenue of $2.17 billion. They expected same-store sales growth of 12.4%. Lululemon reported earnings as retail stores cut prices on clothing to spur demand and remain cautious on ordering new items, as inflation still redirects consumers’ spending toward more basic priorities. But Wedbush analysts said Lululemon has been prudent with its financial forecasts, and argued that Lululemon’s approach — selling products directly to consumers through its own stores and e-commerce channels — shielded it from retailers’ decisions on how best to sell its products. “Thus, we believe that LULU’s 100% DTC model is a boon in the currently-challenging wholesale environment,” they said. “Furthermore, by not having exposure to the wholesale channel, LULU is able to have more pricing discipline and avoid the promotional pressure that has plagued the other athletic brands.” They also said that other “high-momentum” brands, like Deckers Outdoor Corp.’s DECK, +1.97% Hoka sneakers and offerings from On Holding ONON, -0.35%, continued to attract customers. And they said Lululemon attracted a similar demographic. They added: “We also believe that LULU continues to resonate with consumers due to their strong product offering, as the Align women’s franchise is still resonating, belt bags remain hot , and they seem to have generated some buzz for back-to-school category with their backpack business and collaborations with prominent universities .”
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