Lululemon (LULU) earnings for the second quarter of 2023

A customer enters a Lululemon store on June 02, 2023 in Corte Madera, California.

Justin Sullivan | Getty Images

Lululemon raised its guidance for the full year on Thursday after it reported an 18% jump in both sales and profits for the second fiscal quarter, beating Wall Street estimates.

The sportswear retailer now expects sales to be between $9.51 billion and $9.57 billion for the fiscal year, compared to a previous range of $9.44 billion to $9.51 billion.

Lululemon expects earnings to be in the range of $12.02 to $12.17 per share for the year, compared to a previous range of $11.74 to $11.94.

For the current quarter, the retailer expects earnings per share of $2.23 to $2.28 and sales of $2.17 billion to $2.19 billion, in line with analyst expectations, according to Refinitiv.

Here’s how Lululemon did it second fiscal quarter Compared to what Wall Street was expecting, based on a poll of analysts conducted by Refinitiv:

• Earnings per share: $2.68 For the expected $2.54
• he won: $2.21 billion Against the expected $2.17 billion

The company’s reported net income for the three months ended July 30 was $341.6 million, or $2.68 per share, compared to $289.5 million, or $2.26 per share, a year earlier.

Sales rose to $2.21 billion, up about 18% from $1.87 billion a year earlier.

The company handily beat Wall Street estimates in terms of top and bottom results, but fell short of same-store sales expectations: Similar sales rose 11% in the quarter, compared to an estimate of 12.1%, according to StreetAccount.

Lululemon has implemented an ambitious growth plan — its “Power of Three x2” strategy — which calls for doubling sales to $12.5 billion by 2026 compared to 2021 revenue of $6.25 billion. To get there, the retailer has been expanding its brick-and-mortar business and doubling its men’s and direct-to-consumer revenues.

Sales in the men’s category increased by 15% during the quarter, and the retailer opened 10 new stores on a net basis, including its first in Thailand. By the end of the quarter, it had 672 stores globally.

It is also addressing a persistent inventory glut, with levels steadily declining year-on-year. During the second quarter, inventories rose 14% to $1.7 billion, compared to $1.5 billion in the same quarter last year.

Direct-to-consumer revenue increased 15% but was a smaller portion of Lululemon’s overall channel mix in the quarter. Direct-to-consumer sales account for 40% of Lululemon’s total sales, compared to 42% in the same period last year.

Sales in North America increased by 11%, while revenues internationally increased by 52%.

Lululemon’s gross margin was broadly in line with expectations at 58.8%, compared to the 58.5% expected by analysts, according to StreetAccount.

Read the full earnings release here.

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