San Francisco, California – Lululemon Athletica Inc. surpassed Wall Street expectations in its first fiscal quarter, reporting earnings per share of $2.54 compared to the anticipated $2.38 and revenue of $2.21 billion compared to an expected $2.19 billion.
Despite this positive performance, the company’s stock soared by 10% in extended trading on Wednesday. As part of its financial update, Lululemon also announced plans to add $1 billion to its stock buyback program.
CEO Calvin McDonald highlighted the company’s strong momentum in international markets but acknowledged the need for further growth initiatives in the Americas. He emphasized the importance of optimizing product assortment in the U.S. to drive future success.
However, challenges persist for Lululemon, with McDonald noting issues related to inventory management, specifically in colors and sizes. These challenges impacted sales during the first quarter, leading to slower growth in the Americas compared to the previous year.
Looking ahead, Lululemon provided weaker guidance for the current quarter, with revenue expected to be slightly below estimates. Despite these challenges, the company remains confident in its ability to bounce back in the second half of the year.
As Lululemon navigates a more competitive retail landscape, concerns have arisen about its growth prospects, resulting in a 40% decline in its stock year-to-date. The departure of chief product officer Sun Choe and shifting consumer trends towards denim have also added to investor unease.
Overall, Lululemon’s performance in the first fiscal quarter reflects a mix of successes and challenges, underscoring the ongoing evolution facing the athleisure retailer in a rapidly changing market environment.