Lululemon (LULU) Earnings Q3 2023

Black Friday shoppers at the Lululemon store in Garden State Plaza, New Jersey.

Mike Gallia | CNBC

Lululemon said Thursday it saw strong third-quarter demand and a positive start to the holiday shopping season, but the retailer’s shares fell in extended trading after it gave its fourth-quarter outlook.

Here’s how the company fared in its third fiscal year:

  • Stock Gains: Adjusted to $2.53. It was not immediately clear if the figures were comparable to what Wall Street had expected, based on LSEG’s survey of analysts.
  • Revenue: $2.20 billion and $2.19 billion expected

The company’s net income for the three months ended Oct. 29 was $249 million, or $1.96 per share, compared with $255 million, or $2 per share, a year earlier.

Sales rose to $2.2 billion, up 19% from $1.86 billion a year earlier.

In the quarter, sales rose 12% in North America and 49% internationally, but the retailer’s holiday guidance came in light of expectations. Lululemon said fourth-quarter sales would be between $3.14 billion and $3.17 billion, just shy of the $3.18 billion analysts expected, according to LSEG, formerly Refinitiv.

According to LSEG, it expects earnings to be between $4.85 and $4.93 per share, compared with estimates of $4.80 to $5.19. For the full year, Lululemon expects sales of $9.55 billion to $9.58 billion, compared with $8.11 and $9.90 billion, according to LSEG.

“We’re pleased with the trends we’ve seen at the start of the holiday season. That being said, we have much of the quarter ahead of us,” chief financial officer Megan Frank said on a call with analysts. “We are aware of the uncertainties in the macro environment and continue to plan the business for multiple scenarios.”

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Shares fell about 3% in extended trading.

On a call with analysts, McDonald’s said this year’s Black Friday was “the single biggest day” in the company’s history. He added that Lululemon was “encouraged” by trends seen early in the holiday season.

“As we enter the holiday season, we are pleased with our early performance and are well-positioned to deliver to our guests in the fourth quarter,” McDonald’s said in a news release. “I am excited by the significant opportunities ahead.”

Total sales rose 13% in Lululemon’s third quarter, according to the Street Account, beating the 12.4% rise analysts had expected. Comparable sales at the retailer’s stores came in at 9%, below Wall Street’s expected 11.7%.

But comparable direct-to-consumer sales rose 18%, beating the 16.9% analysts were expecting, according to the Street Account.

Lululemon incurred $72.1 million in impairment charges related to Mirror, the affiliated fitness company it bought for $500 million during the now-crippling pandemic. Those costs add to $443 million in impairment charges the company announced earlier this year for equipment.

As part of a new partnership with former rival Peloton, Lululemon will no longer sell the Mirror device or create content for its Studio app. Instead, Peloton will provide all content for Lululemon’s app, and the retailer will become Peloton’s primary athletic apparel partner.

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