The athletic apparel company seems in good shape as its shares rise on earnings beat…
Lululemon released its second-quarter earnings report on Thursday, revealing a very strong performance that topped Wall Street expectations. The company’s shares jumped by as much as 5% in after-hours trading on the news.
Lululemon also bumped its full-year guidance based on the recent growth of its men’s and women’s apparel sales.
Regarding the report, CEO Calvin McDonald stated, “We’re pleased with the ongoing strength across our business. We continue to make progress in delivering against our Power of Three growth pillars — product innovation, omni-guest experience, and market expansion. Our success demonstrates the significant runway in front of Lululemon and I’m grateful to our teams for bringing our vision to life.”
Lululemon’s stock is up by about 52% year-to-date and continues to exceed investors’ expectations.
Lululemon Q2 Earnings Highlights
Here are the highlights from Lululemon’s Q2 2019 earnings report:
- Earnings Per Share: 96 cents
- Revenue: $883.4 million, an increase of 22% from the same quarter last year
- Total Comparable Sales: up 15%
Net income increased to $125 million from $95.8 million a year ago. Sales for its men’s products climbed 35% — outpacing the growth of the company’s women’s products. The company’s direct-to-consumer business also saw a 30% increase in net revenue.
Lululemon also noted in the report that the company had repurchased 9.6 thousand shares of common stock at an average price of $164.05 per share.
Guidance
Lululemon expects its third-quarter net revenue to fall between $880 million and $890 million, while it expects its earnings per share to be in the range of 90–92 cents.
For the full fiscal 2019, the company believes its revenue will end up in the range of $3.8 billion to $3.84 billion. Full-year earnings per share are expected to fall between $4.63 and $4.70.
Growth Strategy
Lululemon is growing at a very fast pace, and it has plans to continue pushing the company forward.
A major part of the apparel company’s growth strategy is the development of several large storefronts. Earlier this year, the company opened its largest store yet in Chicago and has plans to open more. According to the earnings report, Lululemon has already opened 20 new stores in 2019.
The company has also expanded into new categories, like personal care. Regarding these new offerings, McDonald stated, “we’ve identified several areas of white space, where we can test the waters and bring innovation to our guests.”
Five-Year Plan
Earlier this year, Lululemon released a new five-year growth plan … The plan’s primary goal is to double the company’s men’s and online sales. The retailer also hopes to quadruple international revenue by 2023.
To increase men’s sales, Lululemon is focusing on expanding its men’s business into international markets, such as China. They’re also focused on encouraging customer loyalty through loyalty programs and building a more robust e-commerce platform.
As for online sales, the company is expanding its program that allows customers to buy items online and pick them up in-store. It’s also growing its online inventory and adding items that are specifically designed for men.
Lululemon’s quarterly performance and the company’s growth plans seem fit. And as a leader in the athletic apparel industry, Lululemon still has plenty of room to grow.
