Canadian athleisure group Lululemon Athletica Inc. posted a better-than-expected fourth-quarter profits and revenue results, driven by success from its revamped e-commerce platform and stores.
Sales of the Vancouver-based retailer grew at a faster pace in the fourth quarter, adding 18 percent from the same quarter last year to $928.8 million, surpassing analysts’ expectations of $912 million.
Adjusted earnings per share were up from $1 to $1.33, also beating forecast of $1.27 per share.
Gross profit climbed 22 percent to $522.5 million, while operational income gained 30 percent to $256.3 million.
Lululemon Chief Operating Officer Stuart Haselden stated that they are seeing strong momentum across their business as they move into 2018, which is further positioning them to reach their 2020 revenue goal of $4 billion.
Shares of Lululemon jumped 6.2 percent to $83.60 in after-hours trading, in response to the company’s strong quarterly results.
The athletic apparel maker’s gains came as it adjusts to changes, following the sudden departure of Chief Executive Laurent Potdevin in February after he failed to meet the company’s standards of conduct.
Chairman Glenn Murphy, Lululemon’s temporary executive chairman, said the company is continuing its search for a new head and has met with several candidates, adding that they are going to meet as many people as they can.
Strong Sales Performance in E-commerce Business and Stores
Robust sales in its e-commerce business segment and holiday pop-up stores became Lululemon’s main drivers in the fourth quarter, while it looks for a new chief executive and as it tries to contend against competitors.
Lululemon was one of the first to introduce and popularized the athleisure trend by converting expensive ladies’ yoga apparel into mainstream fashion.
However, it had recently experienced sluggish growth activity as new brands, including footwear makers Nike Inc. and Under Armour Inc., and clothing retailer GAP Inc. enter the market.
Since then, Lululemon has been seeking other ways to bolster profits. Its key initiatives have involved reorganizing its fruitless Ivivva brand into an e-commerce operation, raising investment in its online and international businesses, as well as expanding its men’s wear.
It also plans to open 15 to 20 new locations in Asia, a region that has been increasingly focused on health, this year.
The yoga-inspired athletic apparel group’s plans appeared to be effective, seeing that its men’s business was up double digits on great sales performance in its men’s pants. Sales in its ladies’ pants also edged higher by 19 percent.
Lululemon’s digital business was successful as well, reporting a 42 percent growth.
Total comparable sales for the fourth quarter increased 12 percent, while growing sales in its digital business after relaunching its websites in the prior quarter boosted revenue in the direct-to-consumer business, according to the company.
Luluemon has also presented guidance for this year. The retailer expects net revenue of $612 million to $617 million for the first quarter of fiscal 2018, while it estimated earnings per share to be in the range of $0.44 to $0.46 for the quarter.
FSMNews provides you the latest happenings on the market. Subscribe now to FSMNews and get up to date information on forex, commodities, stock s, technology, economy and a lot more.