Lululemon Jumps 5% On Strong Earnings, Guidance
Lululemon Athletica Inc. has reported strong financial results for the first quarter of fiscal 2024. The Vancouver-based athletic apparel company demonstrated strong growth, particularly in international markets.
The company’s net revenue for Q1 2024 reached $2.4 billion, representing a 9% increase compared to the same period last year. This growth was driven by strong performance across various product categories and geographical regions.
Lululemon’s diluted earnings per share for the quarter stood at $2.54, surpassing analysts’ expectations. This figure marks a significant improvement from the $2.28 reported in Q1 2023.
Key financial highlights for Q1 2024 include:
- Cash and cash equivalents: $1.9 billion
- Inventory levels: Decreased by 15% to $1.3 billion
- Share repurchases: 0.8 million shares bought back at a cost of $296.9 million
The company’s board of directors has authorized a $1.0 billion increase to its stock repurchase program, bringing the total available for repurchases to approximately $1.7 billion as of June 5, 2024.
Looking ahead, Lululemon has provided guidance for Q2 2024:
- Projected net revenue: $2.400 billion to $2.420 billion (9% to 10% growth)
- Expected diluted earnings per share: $2.92 to $2.97
- Anticipated tax rate: Approximately 30%
For the full fiscal year 2024, the company maintains its previous outlook:
- Forecasted net revenue: $10.7 billion to $10.8 billion (11% to 12% growth)
- Projected operating margin: Approximately 23.3%
- Updated diluted earnings per share expectation: $14.27 to $14.47
It’s worth noting that fiscal 2024 will be a 53-week year, compared to the 52-week fiscal 2023. Excluding the impact of the additional week, the company anticipates net revenue growth of 10% to 11% for the year.
Lululemon continues to make progress on its Power of Three ×2 growth strategy, which aims to double the company’s 2021 net revenue of $6.25 billion to $12.5 billion by 2026. This ambitious plan focuses on three key pillars:
- Product innovation
- Guest experience
- Market expansion
As part of this strategy, Lululemon intends to:
- Double its men’s business
- Double e-commerce revenue
- Quadruple international net revenue
While Lululemon’s financial outlook remains positive, the company acknowledges potential risks and uncertainties that could impact future results. These factors include:
- Macroeconomic trends
- Changes in consumer shopping preferences
- Shifts in distribution channels
- Fluctuations in guest demand
- Competition in the athletic apparel market