Lululemon Posts Stronger Sales, Profit Room for Omicron Weighing on Business

Lululemon Athletica Inc.

posted higher revenue and profit for the fourth quarter, becoming one of the few direct-to-consumer brands to find growth amid rampant supply-chain challenges and the emergence of the Omicron variant.

The athleisure company on Tuesday reported net revenues of $2.1 billion in the quarter ended Jan. 30, up 23% from the previous year. Sales at stores open for the previous 12 months rose 32%.

Net income grew to $434.5 million, or $3.36 a share, beating analysts’ expectations of $3.27 a share, according to FactSet.

Shares in Lululemon LULU 3.67%

Gained about 8% in after-hours trading as the company forecast stronger-than-expected sales and profit growth this year. Its board also approved a new stock buyback program of up to $1 billion. Lululemon shares are down about 12% this year, compared with a nearly 7% decline in the Nasdaq Composite Index.

Lululemon had braced investors in January that quarterly revenue and earnings would be at the low end of its targets, citing several challenges with the Omicron variant including lower staff availability and reduced operating hours in some locations. Increasing its use of airfreight as a way to alleviate supply-chain issues weighed on the company’s margins in the most recent period.

Lululemon has maintained its dominance in the fast-growing athleisure category as the pandemic influenced consumer preferences, even as other apparel makers entered the category in search of sales.

Chief Executive Calvin McDonald noted on a call with analysts that athletic apparel is still growing at a faster rate than the overall apparel sector. “These trends have accelerated during the Covid-19 period and we are well-positioned to continue to grow our business in 2022 and beyond,” he said, pointing to the performance of the company’s physical and digital storefronts in addition to its diversified product offerings , including menswear.

Earlier this month, the company launched its first collection of footwear, bringing the Blissfeel women’s running shoe to certain stores. It plans on expanding into additional styles through 2023, including developing men’s shoes.

Starting in the second quarter, Lululemon is planning to raise prices on about 10% of its styles and those increases would roll out over the coming year, Mr. McDonald said. “We will continue to monitor the competitive environment to ensure we maintain our price position relative to our key peers,” he said.

While Lululemon’s online business accounted for just over half of revenue in 2020, it represented 44% in the most recent year, as more people returned to shopping in physical stores.

Other direct-to-consumer businesses are searching for growth through expanding their physical footprint, although few have replicated Lululemon’s success thus far. Eyeglasses brand Warby Parker Inc.,

One of several online disrupters reporting widening losses in the most recent quarter, told analysts most of its 2022 growth will come from bricks-and-mortar locations. Online pet-supplies retailer Chewy Inc.

reported its third straight quarterly loss Tuesday, even as net sales rose 17% from the previous year.

Lululemon plans to open a net 70 company-owned stores this year after ending fiscal 2021 with 574.

Lululemon projects revenue to rise between 20% and 22% this year from the $6.26 billion generated last year. Earnings per share are projected to be between $9.15 and $9.35 for the year. Both measures came in ahead of forecasts from analysts.

Write to Charity L. Scott at Charity.Scott@wsj.com

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Appeared in the March 30, 2022, print edition as ‘Lululemon Posts Strong Earnings.’

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