Lululemon Jumps as Investors Cheer Full-Year Sales Forecast

(Bloomberg) -- Lululemon Athletica Inc. climbed after the yogawear maker’s sales forecast eased investor concerns that growth will slow too much from the fastest pace in years.

• Comparable sales, a key gauge of retail success, will increase by a percentage in the low double digits this year on a constant-currency basis, the company said. It also forecast profit for the year that topped analysts’ estimates.

Key Insights

• It was already clear that Lululemon had a strong holiday season when the company in January boosted its outlook for the fourth quarter, and now investors are cheering that the momentum will continue into this year.
• Many retailers are beefing up their e-commerce platforms to capture more sales as shopping behavior shifts online. And Lululemon showed strength there, with online revenue jumping 46 percent last year. It revamped its website and bolstered direct-marketing efforts to draw new customers.
• Analysts are now focused on what strategy Lululemon will map out for the next few years at its April 24 Investor Day in New York. Awaited details include upcoming new products, overseas expansion, and the formalization of a loyalty plan currently being tested.
• Also helping prop up the stock, the company announced a $500 million stock buyback plan.

Market Reaction

• The shares rose as much as 10 percent in late trading. They’ve gained 21 percent this year through Wednesday’s close, outpacing the 12 percent advance in the benchmark S&P 500 Index.

Get More

• For more details on the results, click here.
• For the company statement, click here.

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