Vancouver-based apparel retailer Lululemon Athletica Inc. (Nasdaq:LULU) raised its full-year guidance this afternoon after reporting that its revenue and net income each increased 18 per cent in its second quarter, ended July 30, compared with the same quarter one year ago.
The news comes as many apparel retailers have struggled, with consumers shifting spending to experiences and away from goods.
"Our Q2 results highlight the ongoing strength of the business amid a dynamic operating environment," Lululemon CEO Calvin McDonald said in a release.
The yogawear-maker generated US$2.68 per share in earnings, which was above analysts' average estimate of US$2.54 per share for the quarter. Its sales in the three-month-period increased to US$2.2 billion, which was more than the US$2.17 billion that analysts expected, according to a survey by FactSet. Its total profit, or net income, was US$341.603 million, up from US$289.521 million in the same quarter in 2022.
Lululemon is also becoming an even more international company, with North American revenue up 11 per cent, and revenue outside North America up 52 per cent. The company opened 10 net new company-operated stores during the quarter, including its first one in Thailand. It ended the quarter with 672 stores worldwide.
Not all was rosy. The company's same-store sales were up about 11 per cent, which was lower than the 12.1-per-cent increase that analysts had expected. Direct-to-consumer, or e-commerce, sales increased 15 per cent, or 17 per cent on a constant-dollar basis, the company said.
Lululemon said it expects to earn between US$2.23 and US2.28 per share in the current quarter, while selling between US$2.17 US$2.19 billion worth of goods.
In its current fiscal year, Lululemon said it expects net revenue to be in the range of US$9.51 billion to US$9.57 billion, representing growth of 17% to 18%. Its previous guidance for net revenue in the current fiscal year was between US$9.44 and US$9.51.
Lululemon upped its profit expectation too. It now expects profit to be between US$12.02 and US$12.17 per share for the year, up from the previous range of US$11.74 and US$11.94.
"I am proud of how our teams continue to deliver on our vision and offer an exciting pipeline of new products and experiences to our guests around the world," McDonald said. "Our continued ability to gain market share and bring new customers into the brand illustrates the significant runway ahead for lululemon."
Retail analyst and managing director of GlobalData, Neil Saunders, sent BIV a statement saying that "while growth at Lululemon continues to come down from its high point, the company is still performing way better than both others in its space and than the retail market in general."