Lululemon Athletica LULU released its first-quarter fiscal 2020 results on June 11 after the market closed. The company posted weaker-than-expected earnings and revenue, despite strong e-commerce performance.
By the numbers
The athletic wear maker specializing in yoga products recorded earnings per share of 22 cents in the fourth quarter, down from the 74 cents reported in the year-ago quarter. Analysts had predicted EPS of 26 cents. Revenue of $652 million plunged 17% on a year-over-year basis and missed estimates of $711.4 million.
Digital sales were up 68% to $352 million, accounting for more than 54% of the company’s total quarterly revenue.
Reflecting on the company’s performance, CEO Calvin McDonald had the following to say:
“I’m proud of how lululemon has navigated these unexpected and unprecedented times. We are learning more every day about our guests — how they enjoy interacting with us online and what makes them comfortable as stores reopen. Our strong digital business demonstrates the strength of our guest connection and the long-term opportunity to create further Omni experiences going forward.”
Key insights
Due to the pandemic, the company shut down all stores in Mainland China in February for a temporary period. As the outbreak has eased in China, the company has reopened all its stores.
Besides China, the company shut down all retail stores in North America, Europe and certain countries in the Asia Pacific region in March. After May 3, the company started reopening its retail stores in these markets. As of June 10, as many as 295 company-operated stores were open.
The demand for yoga products was on the rise during the quarter as more people engaged in at-home workouts. In addition, the company noted a market shift from formal to comfort wear, which is why it is rolling out three new pants styles for use outside the gym.
At the end of the quarter, Lululemon had cash and cash equivalents of $823 million. In addition, the company had $398.2 million under its undrawn revolving credit facility.
Guidance
The company pulled its fiscal 2020 guidance, citing the global uncertainty caused by the Covid-19 pandemic.
Disclosure: I do hold any positions in the stocks mentioned.
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