Lululemon Rises as Yogawear Maker Reports Accelerating Sales
(Bloomberg) -- Lululemon Athletica Inc. jumped in late trading on Wednesday after boosting its outlook for the year and reporting sales that outpaced expectations -- showing the luxury yogawear company is capitalizing during the extended work-from-home period.
Revenue for fiscal 2022, ending in January, will be as much as $6.26 billion, the company expects. Its previous guidance had an upper limit of $5.91 billion. Lululemon’s forecast for third-quarter sales and profit also beat Wall Street’s estimate. Chief Executive Officer Calvin McDonald now sees the company beating its long-term revenue target by the end of this year -- two years ahead of schedule.
The company’s success appears to be broad-based, with Chief Financial Officer Meghan Frank citing “a strong response to our product offering, improving productivity in our stores, and sustained strength in e-commerce” in a statement. On a call with analysts, McDonald said stores’ productivity was now on par with 2019, before the pandemic. The company is once again hosting in-person classes and events, which help to drive repeat visits and impulse purchases.
Lululemon shares rose as much as 13% in late trading. The stock has risen 9% so far in 2021 through Wednesday’s close.
Like the rest of corporate America, Lululemon is navigating a minefield of rising costs and logistical challenges, with port congestion, factory closures in Vietnam and reduced air freight capacity. The latter in particular represents a challenge for the company, which even before the pandemic had resorted to pricier air freight to get its products to market -- an option that’s not available to less-profitable competitors. McDonald said these obstacles boosted costs.
Net revenue for Lululemon’s e-commerce business represented 41% of total net revenue in the fiscal second quarter ended Aug. 1. That was down from 61% a year earlier, when stores were still reopening from the initial shutdown.
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