Tops Profit and Business Revenue Estimates, Offers Higher Guidance
In what appears to be a perfect quarter, Lululemon said it made a profit of $2.58 per share to beat the $2.49 expected from market analysts. Business revenues surged 24% to $1.73 billion, again higher than the $1.66 billion expected from surveyed market analysts. In a year-ago period, the company earned $2.28 per share on business sales of $1.4 billion.
A strong performance in the quarter ending January 31 was possible due to a 92% surge in digital sales. Broken down by segments, women’s sales rose 19%, and men’s grew 17% in Q4. International sales surged 47%, while North America followed with a 21% rise in business revenues.
“Our continued growth demonstrates the strength of lululemon -- before, during and as the pandemic subsides. We are still in the early innings of our growth, fueled by exciting innovations that create even more opportunity into the future,” Calvin McDonald, chief executive officer of the company, said in a statement.
Lululemon said that sales in the direct-to-consumer (DTC) business segment, a closely-watched metric by retail investors, almost doubled to represent over half (52%) of total sales in Q4. A year ago, the company reported DTC quarterly sales of 33%.
“We pulled forward investments in our direct-to-consumer channel, completed our first acquisition, and tightly managed expenses while also supporting our people. These measures contributed to our strong fourth quarter results, including growing revenue by 24%, and are helping fuel our even stronger top-line growth projections for 2021,” added Meghan Frank, CFO of the athletic clothing company.
For the current quarter, Lululemon expects Q1 business revenues in a range of $1.10 billion to $1.13 billion to again top Wall Street’s expectations of $999.5 million. For the full-year, business revenues are now projected between $5.55 billion and $5.65 billion. The Wall Street analysts were calling for $5.42 billion.
These projections are placing the company on track to meet its mid-term target of doubling men’s and online sales as well as quadrupling business revenues abroad.
Last year, the company announced it acquired at-home fitness startup Mirror for $500 million. The athletic apparel company reiterated it will ramp up investments in the startup, which generated $170 million in business revenues last year.
The athletic clothing startup designed a reflective display, which costs $1,495, with cameras and speakers to allow its users to stream workouts while watching themselves to measure their performance against an instructor on the display. When not used, Mirror acts like a normal slimline mirror.
Lululemon stock price trades over 1% in the red in pre-market trading in New York after it initially plunged 8%. The company cautioned that further rise in the number of new COVID-19 infections could yield additional restrictions and supply chain disruption.
Lululemon reported better-than-expected revenue and earnings results for Q4 and offered strong guidance as the digital sales growth continued to impress.