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Lululemon Athletica Reports Strong Q3 Revenue Growth

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Andrew R. Michaud

• December 07, 2023

Lululemon Athletica experienced a significant increase in revenue during the third quarter, with a rise of nearly 20%. However, despite this positive news, the company's stock fell in after-hours trading due to its lower-than-expected guidance for the fourth quarter.

Impressive Earnings and Revenue Growth

Lululemon posted adjusted earnings of $2.53 per share, surpassing the consensus estimate of $2.28 per share provided by aggregator site FactSet. The company's revenue reached $2.2 billion, representing a 19% year-over-year increase and slightly exceeding the consensus forecast of $2.19 billion. Additionally, same-store sales rose by 13%, meeting expectations of a 12.9% increase.

Fourth Quarter Outlook Disappoints Investors

Despite these strong results, Lululemon's stock fell by 3.4% in after-hours trading as the company provided softer-than-anticipated guidance for the fourth quarter. The revised forecast for fourth-quarter revenue is expected to range between $3.14 billion and $3.17 billion, falling slightly below the consensus estimate of $3.18 billion. Furthermore, the projected earnings per share range of $4.85 to $4.93 fell short of the expected $4.94 per share.

CEO's Optimistic Outlook for the Future

Looking ahead to the holiday season, CEO Calvin McDonald expressed confidence in Lululemon's ability to perform well in the fourth quarter. However, despite this positive outlook, investors remained unsatisfied with the company's guidance for the period.

Revised Full-Year Forecast

Lululemon adjusted its full-year forecast slightly higher, with predicted revenue for fiscal 2023 now ranging between $9.55 billion and $9.59 billion, compared to the previous guidance of $9.51 billion to $9.57 billion. The company also revised its projected adjusted earnings per share to range from $12.34 to $12.42, up from $12.02 to $12.17.

Conclusion

Lululemon Athletica's strong third-quarter performance showcased impressive revenue and earnings growth. However, the company's stock price declined due to lower-than-expected guidance for the fourth quarter. Overall, Lululemon remains optimistic about its prospects, heading into the crucial holiday season.