Lululemon Athletica (LULU, Financial) released its fourth-quarter financial results on March 26 after the market closed. The company posted stronger-than-expected earnings and revenue in quarter courtesy of robust comparable store sales coupled with strong e-commerce performance.
By the numbers
The athletic wear maker specializing in yoga products recorded earnings per share of $2.28 in the fourth quarter, up from $1.65 reported in the year-ago quarter. Analysts had called for earnings of $2.24 per share. Revenue of $1.4 billion inched up 20% on a year-over-year basis and surpassed estimates of $1.38 billion.
Comps inched up 20% due to a rise in in-store as well as online customer traffic. Digital sales were up 41% in the reported quarter. Revenue from the Men's category grew 32%, while the women’s section rose 17%. The company’s CEO Calvin McDonald commented on the following on the performance:
"2019 was a strong year for lululemon, as our teams executed against our Power of Three growth plan. We are now navigating an extraordinary environment, which is currently impacting our business. The strength of our brand and strong financial position will help us manage through the day-to-day, while continuing to effectively plan for and invest in our future."
Effect of the Covid-19 pandemic
Due to the pandemic, the company shut down all stores in Mainland China in February for a temporary period, of which one has been reopened recently.
As the outbreak has eased in China, the company has reopened almost all its stores. McDonald said that although sales haven’t reached the normal level as it was prior to store closure, volume is soaring “week by week.”
Besides China, the company shut down all retail stores in North America, Europe, Malaysia and New Zealand in March, as well as a distribution center in Sumner, Washington.
McDonald said the company is putting money in omnichannel abilities, which integrates different methods of shopping. He said now is “not the time to stop building for the future.” The company is providing “sweat sessions” to customers in the form of yoga and cardio workouts online.
Guidance
The company did not issue any guidance figure for fiscal 2020, citing the global uncertainty caused by the Covid-19 pandemic as the reason.
Disclosure: I do not hold any positions in the stocks mentioned.
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