Lululemon slumps after holiday quarter guidance misses high expectations
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Lululemon Athletica (NASDAQ:LULU) fell in after-hours trading on Thursday despite posting a narrow earnings beat with Q3 report. Investors may have been looking for even stronger guidance for the holiday quarter.
Comparable sales at stores were up 22% during the quarter or 31% on a constant-currency basis..
Total revenue was up 28% during the quarter on a constant dollar basis, led by a 41% jump in international markets and 26% gain in North America.
Direct to consumer revenue rose 40% Y/Y to account for 40% of sales.
Gross margin was 55.9% of revenue vs. 54.6% a year ago. Adjusted operating margin fell 40 basis points during the quarter.
LULU opened 23 net new company-operated stores during the quarter to end with a store count of 623.
CFO Meghan Frank on the outlook: "We are proud to have delivered another quarter of strong sales and earnings growth, despite an operating environment that remains dynamic. These results illustrate the strength and differentiation of our omni operating model and position us well to deliver ongoing value for our stakeholders. We look forward to a strong finish to our fiscal year."
The company ended the quarter with its inventory position up 85% Y/Y to $1.7B. LULU believes its inventories are well positioned to support its expected revenue growth in the fourth quarter.
Looking ahead, LULU sees Q4 revenue of $2.61B to $2.66B vs. $2.66B consensus. EPS of $4.20 to $4.30 is anticipated vs $4.29 consensus. The midpoints of the ranges were below the consensus marks.
Shares of Lululemon (LULU) dropped 9.05% in after-hours trading to cut into recent gains. LULU has been on a hot streak with a +25% jump over the last two months.