Canadian yogawear retailer Lululemon Athletica has reported double-digit hikes in both earnings and revenue in the first quarter, with CEO Calvin McDonald noting “strong momentum” across the entire business.
For the three months ended 5 May, earnings climbed 22.3% to reach $96.6m from $75.1m a year earlier. Gross margin was 53.9%, an increase of 80 basis points compared to the first quarter of fiscal 2018.
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Net revenues, meanwhile, were up 20% on last year to $728.3, and on a constant dollar basis were up 22%. Based on a shifted calendar, total comparable sales increased 14%, or by 16% on a constant dollar basis. Comparable store sales were up by 6%, or 8% on a constant dollar basis, while direct to consumer net revenue surged 33%, or by 35% on a constant dollar basis.
The retailer is working to deliver its ‘Power of Three’ five-year vision, which aims to drive product innovation, create integrated omni-guest experiences, and expand deeper in key markets around the world – ultimately boosting revenue and earnings growth. Specifically, the growth strategy includes a plan to double men’s and digital revenues and to quadruple international revenues.
Looking ahead, Lululemon says the for fiscal 2019 it now expects net revenue to be in the range of $3.73bn-$3.77bn based on a total comparable sales increase in the low double digits on a constant dollar basis. Diluted earnings per share are expected to be in the range of $4.51 to $4.58 for the full year, based on a 28% effective tax rate.
“Product and guest engagement are key drivers behind Lululemon’s industry-leading same-store-sales and traffic growth in Q1,” notes Cowen Research analyst John Kernan. “Guests responded across the board to Lululemon’s men’s and women’s offerings in Q1, along with its events and social engagement, which are set to continue in Q2 and beyond.”
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