Fashnopsis:
- Lululemon’s Q1 sales hit $2.2 billion, fueled by a 35% international boom, led by China.
- Domestic sales remained steady, but comparable sales hinted at a U.S. rebound for Lululemon.
- Profitability grew with a 20 basis point jump in gross margin for Lululemon.
- Earnings per share for Lululemon rose to $2.54, exceeding expectations for Q1.
- Lululemon predicts continued growth in 2024, with a positive outlook for revenue and earnings.
Lululemon Athletica Inc. (LULU) delivered a positive first quarter for fiscal 2024, exceeding expectations with strong growth in international markets. The company’s financial performance was highlighted by a 10% increase in net revenue to $2.2 billion, driven by a 35% surge in international net revenue.
International Markets Lead the Charge
The momentum in Lululemon’s international business was a key takeaway from the report. International net revenue jumped 35% year-over-year, reaching new heights on a constant dollar basis as well (40% increase). This growth was particularly impressive in China, where net revenue soared by 45% (52% on a constant dollar basis). The rest of the world segment also demonstrated strong performance with a 27% increase in net revenue (30% on a constant dollar basis).
Flat Sales in Americas, But Comparable Sales Show Promise
While net revenue growth in the Americas lagged behind international markets at 3% (4% on a constant dollar basis), comparable sales in the region remained flat compared to Q1 2023. This suggests that Lululemon is effectively optimizing its product assortment for the U.S. market, potentially positioning itself for future growth domestically.
Overall Growth and Increased Profitability
Lululemon’s overall comparable sales increased by 6% (7% on a constant dollar basis), reflecting continued customer demand for the brand’s athletic apparel. Additionally, the company’s gross profit margin improved by 20 basis points to 57.7%, indicating strong inventory management and pricing strategies.
Earnings Rise and Increased Shareholder Value
Diluted earnings per share climbed to $2.54, up from $2.28 in the previous year’s first quarter. Lululemon also remains committed to returning value to shareholders, repurchasing 0.8 million shares of common stock for $296.9 million in Q1 and authorizing a $1.0 billion increase to its stock repurchase program.
Positive Outlook for 2024
The company expects net revenue to reach $2.400 billion to $2.420 billion in Q2 2024, representing a growth of 9% to 10%. Lululemon also maintained its full-year net revenue guidance of $10.700 billion to $10.800 billion and raised its diluted earnings per share guidance to $14.27 to $14.47.
Lululemon’s strong Q1 performance and optimistic outlook for 2024 demonstrate the company’s continued success in the athletic apparel market. With a focus on international expansion and product innovation, Lululemon is well-positioned to maintain its growth trajectory throughout the year.
Image Source: Lululemon
