Lululemon has raised its fourth-quarter earnings and revenue guidance, signaling a stronger-than-anticipated performance during the holiday season. The company's revised projections reflect its optimism, expecting sales growth between 6% and 7%, excluding an additional fiscal week. Overall, Lululemon anticipates sales to increase by 11% to 12%, reaching between $3.56 billion and $3.58 billion, up from the previous estimate of $3.48 billion to $3.51 billion.
In a move that further underscores its confidence, Lululemon forecasts fourth-quarter earnings per share to range from $5.81 to $5.85, compared to the earlier guidance of $5.56 to $5.64. Additionally, the company expects gross margins to grow by 0.3 percentage points, a notable improvement from its prior expectation of a decline between 0.2 and 0.3 percentage points.
"During the holiday season, our guests responded well to our product offering, enabling us to increase our fourth quarter guidance," – Meghan Frank
This upbeat outlook comes despite initial reservations about the holiday shopping season's potential impact. Retail sales in the U.S. rose by 3.8% year over year, surpassing the National Retail Federation's expectations of a 2.5% to 3.5% increase. Early indicators have suggested a more favorable outcome than anticipated, prompting Lululemon to adjust its forecasts accordingly.
The company's cautious stance was evident when it provided holiday guidance during its fiscal third-quarter earnings report in December. At that time, Lululemon's finance chief, Meghan Frank, emphasized the importance of strategic planning given the market conditions and the shorter holiday shopping season.
"While we feel good about the start of the holiday season, we still have large volume weeks in front of us," – Calvin McDonald
Chief Executive Officer Calvin McDonald echoed this sentiment, stressing the need for careful consideration in planning for the fourth quarter.
"Given the shorter holiday shopping season, we continue to be thoughtful in our planning for quarter four overall." – Calvin McDonald
As Lululemon navigates the final weeks of the holiday season, its current trajectory suggests a promising close to the fiscal year. The increased guidance reflects both consumer resilience and the company's ability to adapt its strategy effectively.