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Lululemon investors didn’t break a sweat on Wednesday.
The Canadian company known for its yoga gear reported better-than-expected third quarter results on Wednesday and its chief executive lifted its full-year outlook, noting he was “energised” by its momentum.
New York-listed shares in the Vancouver-based company rose more than 6 per cent to $71.78 in extended trading after it said net revenues rose 14 per cent from a year ago to $619m, representing a 12 per cent increase on a constant currency basis. That topped estimates of $609.9m, according to a Thomson Reuters survey. Total same-store sales — which include sales both online and in stores that have been open at least 12 months — rose 8 per cent.
Profits slid to $58.9m, or 43 cents a share, in the three months ended October 29, compared with $68.3m, or 50 cents a share, in the year-ago quarter, with the decline reflecting $22m in costs tied to restructuring of ivivva, its girls brand. That was just shy of the 46 cents that analysts surveyed by Thomson Reuters had forecast. Adjusted earnings of 56 cents a share topped estimates.
“The strength of our Q3 earnings supports our unique position as the global brand defining an active, mindful lifestyle,” chief executive Laurent Potdevin said. “As we start the holiday season, I’m energised by our momentum and we are increasing guidance to reflect this performance”.
Lululemon had benefitted not only from a yoga craze but also the athleisure trend that saw people wear athletic gear outside of the gym. But it hasn’t always been smooth sailing for Lululemon, after its founder alienated some customers amid the 2013 “sheergate” scandal, and poor performance from ivivva.
It has also faced competition from rivals like Gap’s Athleta, traditional athletic wear makers like Nike and Under Armour, and upstarts like Gaiam and actress Kate Hudson’s Fabletics.
Despite the competition, Lululemon has plans to grow its revenue to $4bn by 2020 and more than double its earnings, in part by building its footprint in North America, expanding its online and overseas businesses and product innovation.
Looking ahead, Lululemon boosted its outlook for full-year adjusted earnings to a range of between $2.45 to $2.48 a share, up from the $2.35 to $2.42 that it had forecast in August. The company also tightened its full-year revenue outlook and now expects to post revenues of between $2.59bn to $2.61bn, compared with its previous range of between $2.55bn to $2.60bn.
Lululemon shares are up 4 per cent so far this year.