Lululemon Athletica Inc. is still running up the growth curve.
And chief executive officer Calvin McDonald said the company has plenty of momentum with opportunities still in its core business as well as new stores on tap, new categories such as footwear rolling out and room to expand internationally.
The brand was one of the few to post solid gains through the pandemic — and it continued to move from strength to strength in the fourth quarter.
Net income increased 31.7 percent to $434.5 million, or $3.36 a diluted share, from $329.8 million, or $2.52, a year earlier.
Adjusted earnings per share of $3.37 came in 9 cents ahead of the $3.28 Wall Street analysts projected.
Revenues for the three months ended Jan. 30 increased 23.1 percent to $2.1 billion from $1.7 billion a year earlier.
“The fourth quarter was a strong finish to a strong year,” McDonald told analysts on a conference call. Wall Street seemed to agree as shares of Lululemon increased 7.4 percent to $369.28 in after-hours trading.
While there are plenty of macroeconomic trends that are weighing on most brands — from the turmoil of the war in Ukraine to the pandemic and supply chain backups to inflation — the CEO pointed instead to the big trends in the brand’s favor.
“Lululemon continues to benefit from several consumer trends that uniquely position us in the marketplace,” McDonald said. “First, category strength as athletic apparel continues to outpace growth in overall apparel. Second, the growing significance of versatility both while guests are engaging in their fitness routines and in their everyday lives. Third, the importance of both physical retail and the convenience of digital engagement. These speak particularly well to our omni operating model and finally, the increasing focus on physical, mental and social well-being, given everything that people are navigating across the globe.”
For the full year, Lululemon’s net earnings increased 65.6 percent to $975.3 million, or $7.49 a diluted share, from $588.9 million, or $4.50, in 2020. Revenues increased 42.1 percent to $6.3 billion.
The company opened 53 new stores last year, leaving it with a total of 574 doors.
Last year the firm bought back 2.2 million shares for a total of $812.6 million and plan to keep going with a new $1 billion repurchase authorization from its board last week.
This year the firm is looking to post earnings per share of $9.15 to $9.35, not including the impact of any share repurchases, as revenues are seen growing 20 percent to 22 percent to a range of $7.5 billion to $7.6 billion. Along the way, the brand plans to add 70 new stores.
“Looking at our full-year results I’m particularly proud that we crossed the $6 billion in annual revenue milestone, and we accomplished this despite the ongoing challenges in the macro environment, and we have seen our momentum continue and accelerate as we enter the first quarter,” McDonald said.
The company is not immune to price pressures and McDonald said it would be modestly raising prices on about 10 percent of its styles, but would be careful to remain competitive.
And much of the brand’s assortment can outlast short-term logistical troubles.
“Our core seasonless product makes up a meaningful percentage of our inventory, approximately 45 percent, which carries minimal markdown risk and positions us well to fulfill ongoing and future guest demand,” McDonald said.
Going forward, he pointed out the brand’s multiyear partnership with the Canadian Olympic Committee, the footwear launch and international as areas to watch this year.
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