Canadian yogawear retailer Lululemon Athletica has upped its fourth quarter net revenue and earnings guidance on the back of better than expected holiday sales – but says it is still assessing the likely impact of the recently passed US tax reform.
The Vancouver, British Columbia-based company now expects net revenue for the quarter ending 28 January will be in the range of US$905m to $915m based on a total comparable sales increase in the high single digits on a constant dollar basis. This compares to Lululemon’s previous guidance of $870m to $885m.
It has also upped its diluted earnings per share guidance to $1.24 to $1.26 for the fourth quarter, from $1.18 to $1.21.
Meanwhile, excluding the impact of the restructuring of the company’s Ivivva operations, it expects adjusted diluted earnings per share to be in the range of $1.25 to $1.27 for the quarter, compared to $1.19 to $1.22 previously.
Last year, Lululemon said it is to shutter around 70% of its Ivivva stores as the brand transitions to a primarily e-commerce focused business.
Lululemon to streamline Ivivva as Q1 sales growth slows
It added the updated guidance also continues to assume a 30.4% tax rate and does not reflect the impact of the US tax reform which was enacted on 22 December 2017.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataLululemon said it is assessing the impact that the tax reform will have, but expects to recognise a “significant” income tax expense in the fourth quarter of fiscal 2017 related to the one-time deemed repatriation tax on accumulated foreign earnings. It believes the impact of the tax reform will be favourable to the company’s effective tax rate in fiscal 2018.
“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,” said CEO Laurent Potdevin.
