Lululemon had another strong quarter with both revenues and profits exceeding analyst estimates, but the group’s simultaneous Q4 outlook of 13 to 14 percent sales expansion sent Lululemon shares down by 2.8 percent in after-market trading yesterday. The group, which said early holiday sales were strong, is projecting total Q4 revenues of $3.14 to $3.17 billion and full-year sales of $9.55 to $9.58 billion and a corresponding 23 percent increase in adjusted earnings per share.
In Q3, Lululemon total revenues rose by 19 percent to $2.2 billion as North American sales increased by 19 percent and increased by 49 percent elsewhere in the world. Comparable sales increased by 14 percent on a constant currency basis, and direct-to-consumer sales rose by 19 percent to represent 41 percent of all revenues. Operating income fell by 4.1 percent to $338.1 million as net profit fell by 2.6 percent to $248.7 million for the period ended Oct. 29. The results were impacted by a $72.1 million charge related to its Mirror business, which it will now discontinue given a new partnership with Peloton Interactive for digital fitness content. Adjusted gross margin expanded by 220 basis points to 58.1 percent.
