LDN - Business

Lululemon says holiday season sales better than it expected

[January 08, 2018] (Reuters) - Lululemon Athletica Inc said on Monday the holiday shopping season was even better that it had expected and raised its profit and revenue forecasts for the fourth quarter, sending the Canadian yoga and leisure apparel maker's shares up.

The company had said in December that the holiday season had gotten off to a great start, with the company's highest traffic and largest sales ever on Black Friday and Cyber Monday.

Lululemon said it now expects fourth-quarter comparable sales to increase in the high single digits, on a constant dollar basis, compared with its previous forecast of a mid-single digit rise.

"We are thrilled with our performance this holiday season that reflects an accelerating trend across all parts of our business, and we look forward to continued momentum in 2018 and beyond," Lululemon Chief Executive Laurent Potdevin said in a statement.

The Vancouver-based company said its forecast for a stronger profit excluded the impact of the recent U.S. tax reform, but it expects to take a significant tax charge in the quarter related to the one-time deemed repatriation tax on foreign earnings.

Lululemon does not break down revenue by geographic area, but gets a significant amount of its sales from the United States.

The holiday-shopping quarter is critical for retailers and can account for up to 40 percent of their annual revenue. The National Retail Federation has forecast total U.S. holiday sales of as much as $682 billion, nearly 4 percent higher than last year. (http://bit.ly/2xW7Oee)

[to top of second column]

Yogawear retailer Lululemon Athletica Inc's logo is pictured at its store in downtown Vancouver June 11, 2014. REUTERS/Ben Nelms

Lululemon now expects net revenue of $905 million to $915 million for the quarter ending Jan. 28, implying year-over-year growth of roughly 15-16 percent and higher than the forecast of $870 million to $885 million it gave on Dec. 6.

The company expects earnings of $1.24 to $1.26 per share, up from its previous forecast of $1.18 to $1.21. It raised its adjusted earnings forecast to between $1.25 and $1.27 per share.

Analysts on average were expecting an adjusted profit of $1.22 per shares and revenue of $883.8 million, according to Thomson Reuters I/B/E/S.

Lululemon's forecast was based on a 30.4 percent tax rate, and the company said it expects the U.S. tax reform to be favorable to its effective tax rate in fiscal 2018.

Shares of Lululemon, which will report fourth-quarter results on March 27, were up 3 percent at $81.69 in trading ahead of the markets' open on Monday.

(Reporting by Nivedita Bhattacharjee; Editing by Savio D'Souza)

Back to top