Lululemon Athletica’s stock decreased by 3% this Wednesday after the company reported that it had seen growth in sales but low on the expectations from Wall Street.
In the past, Lululemon proved to be the best athletic apparel for the year. The price share even increased by 90% and was doing way better than the giant competitors such as Nike, Adidas, and Under Armour.
Lululemon is a Canadian Athleisure apparel which has been focusing on the international market, increasing their products to men’s wear and self-care products. They also gave their loyal clients a subscription-based loyalty program. They have been doing really since 2018. It was founded in 1998 and patented “Luon” a specific type of material which gives its yoga pants soft feel. Now they have expanded to more than yoga pants.
Lululemon’s current reported that they have financial results that were better than they expected. For the 3rd quarter, the company posted 96 cents in earnings per share as compared to the earlier quarters, which was only 71 cents. But analysts from Wall Street forecasted 93 cents.
According to CEO Calvin McDonald, “We’re proud of the continued momentum in our business. We are successfully executing on our Power of Three growth plan as we create authentic connections with new and existing guests around the world.” The net revenue was $916.1 million against the expectation of $897 million from Wall Street. They reported that sales increased by 17% on a constant dollar basis while there was an increase of 11% for in-store purchases and a 30% increase for direct-to-consumer. Furthermore, the company bought an average cost of $179.71 per share for 44,500 shares.
Moving ahead, the company is expecting a $1.315 – $1.330 billion and diluted earnings of $2.10 to $2.13. With the raised guidance, though, it should expect a $4.75 to $4.78 and revenue of $3.895 to $3.91 billion.
The CEO further exclaimed that the men’s apparel grew 38% in its third quarter, preferably on outerwear, pants, and underwear. This big company should double men’s clothing by 2023.
They have been seeking to expand and persuading male shoppers that the pants are worth its price. As of the moment, its most expensive pants cost $200.
One new customer, a male middle school teacher, found his dress pants but also could be sweatpants are now found in Lululemon, so he bought a pair. This kind of man is what the company is eyeing on. It might be expensive for a $100+ pair of pants, but he said they’re worth the tag price. He would buy more of them, but those would be the only apparel he might get from Lululemon.
McDonald said that the company is still in its early stages of growth, and there is still a need for an increase of awareness in the brand. Many even don’t know about their brand. They want to expand more in North America, Europe, and China. Aside from that, they would also go beyond women’s athleisure. Many competitors have been flooding the market with a cheaper version of these apparels.