Source: Zhitong Finance
After the US stock market on Wednesday EST,$Lululemon Athletica (LULU.US)$Announcement of results for the first quarter of the 2024 fiscal year ended April 28, 2024. According to the data, the company's Q1 revenue was US$2.21 billion, up 10% year on year, better than market expectations of US$2.19 billion; net profit was US$321 million, up 11% year on year; earnings per share were US$2.54, better than market expectations of US$2.42, compared to US$2.28 for the same period last year.
Despite tepid growth, Lululemon shares rose nearly 10% after the market. The company also announced it will add $1 billion to its share repurchase program.
Lululemon CEO Calvin McDonald emphasized in a press release the “strong momentum” the company is seeing in the international market and hinted that more work is needed in the Americas to grow again in the region.
“We're excited to see the progress we've made in optimizing our US product portfolio,” McDonald said. Looking ahead, we will continue to have significant room for growth and are confident in our team's ability to achieve this goal.”
Last quarter, McDonald said that the company discovered changes in the consumption dynamics of American consumers, but also pointed out that Lululemon's mistake was that its stores did not have the right size and color, which affected sales. In a conference call with analysts on Wednesday, McDonald said these issues persisted in the first fiscal quarter.
McDonald said that Lululemon's leggings had too few color options, and the size customers wanted was once again out of stock. McDonald added that the company did not buy enough products, causing the products to be out of stock. He expects the company's inventory situation to improve in the second half of the year.
Lululemon is still growing in the Americas, but at a much slower rate than last year. The company's sales in the Americas increased 3% in the first quarter of this year, compared to 17% in the same period last year. Comparable sales remained the same as the previous year.
According to StreetAccount data, the comparable sales volume of Lululemon's overall business increased by 6%, which was lower than analysts' expectations of 7%.
As growth in the American market slowed, Lululemon issued weak guidance for the second fiscal quarter. The company expects revenue for the second fiscal quarter to be between $2.4 billion and $2.42 billion, slightly below market expectations of $2.45 billion. The company expects earnings per share for the fiscal second quarter between $2.92 and $2.97, compared to market expectations of $3.02.
The company seems to expect the situation to improve in the second half of the year. Lululemon expects full-year revenue of between $10.7 billion and $10.8 billion, in line with market expectations; earnings per share are expected to be between $14.27 and $14.47, higher than market expectations of $14.11.
Lululemon is still widely regarded as a top-tier retailer and market leader, but has recently experienced some difficulties. By the close of trading on Wednesday, the company's stock price had dropped 40% so far this year as investors worried about its growth prospects.
Lululemon recently announced that Sun Choe, who has been the chief product officer for a long time, will resign, causing the company's stock price to drop. Denim clothing is being favored by consumers, and investors are worried that consumers may replace sportswear with jeans, which may hurt Lululemon's profits.
editor/tolk