Dive Brief:
- Lululemon on Monday updated its fourth quarter guidance. The athletic apparel retailer expects revenue to range from $3.17 billion to $3.19 billion, a 14% to 15% increase from Q4 of 2022. The company previously issued revenue guidance of $3.14 billion to $3.17 billion.
- The company also raised its gross margin outlook. Lululemon now expects its gross margin to range from 58.6% to 58.7% for the fourth quarter of fiscal 2023. Lululemon’s previous outlook for this metric was 58.3% to 58.6%. Earnings per share will range from $4.96 to $5.00, up from $4.85 to $4.93.
- Lululemon’s Q4 guidance for selling, general, and administrative expenses and its effective tax rate remain unchanged. During Q3, the company’s net revenue rose 19% to $2.2 billion, up 12% in North America and up 49% internationally.
Dive Insight:
“We are pleased with our performance during the holiday season, as guests continue to respond well to our innovative and versatile product offerings,” Chief Financial Officer Meghan Frank said in a statement. “Our sales trend remains balanced across channels, categories, and geographies, enabling us to raise our guidance for the fourth quarter and close out another strong year.”
Lululemon showed good momentum last year through Q3. Analysts with Jane Hali & Associates told Retail Dive last month that the brand is doing a good job of adapting to evolving consumer trends, while also maintaining a strong digital presence.
Frank said in an earnings announcement last month that Q3 performance exceeded top- and bottom-line expectations. “As we look to the end of our fiscal year and into 2024, we remain focused on driving long-term growth and creating value for all our stakeholders,” Frank said.
The company repurchased 0.6 million shares of stock during the third quarter. On Nov. 29, the board of directors approved an additional stock repurchase for up to $1 billion of the company’s shares.
Canada-based Lululemon wants to double the business’s 2021 net revenue of $6.25 billion to $12.5 billion by 2026. The key elements of the plan are product innovation, guest experience, and market expansion. The growth strategy includes a plan to double its men's and direct-to-consumer business and a goal of quadrupling international net revenue relative to 2021.
The company’s updated guidance follows recent controversial comments by Lululemon founder Chip Wilson. In a Forbes interview, Wilson was dismissive of his former company’s current diversity, equity and inclusion efforts. He also said “you’ve got to be clear that you don’t want certain customers coming in." Critics said his comments reflected a tone deaf, body shaming attitude.
Wilson resigned as chairman in 2013 and completely left the company nearly a decade ago. But the company still sought to distance itself from the remarks.
“Chip Wilson does not speak for Lululemon, and his comments do not reflect our company views or beliefs,” a company spokesperson said in a statement emailed to Retail Dive. “Chip has not been involved with the company since his resignation from the board in 2015 and we are a very different company today.
“Lululemon is committed to creating and fostering an inclusive, diverse, and welcoming environment throughout our organization and across our communities. We have made considerable progress since launching our Inclusion, Diversity, Equity and Action (IDEA) function, and we are proud of the goals we have achieved. We also recognize that becoming a more diverse and inclusive organization takes time and is only possible through the sustained efforts of our leaders and our people. We remain steadfast in our commitment to become a more inclusive and diverse company.”
