Lululemon ups forecasts as growth efforts yield robust results

Lululemon Athletica Inc reported better-than-expected second-quarter results on Thursday, buoyed by higher traffic across all segments, helping the Canadian athletic apparel maker to raise its revenue and profit forecasts for the year.

The Vancouver-based company’s shares rose as much as 5.8 per cent in late New York trading before paring some of the gain.

The yoga pants specialist, which is now pushing into newer categories such as menswear, said it now expects full-year net revenue to be in the range of US$3.80 billion to US$3.84 billion. It was earlier expecting revenue of US$3.73 billion to US$3.77 billion.

The company also increased its full-year profit forecast in the range of US$4.63 to US$4.70 per share, from US$4.51 to US$4.58 per share.

Total comparable sales, a key indicator for the athleisure company’s business, rose 15 per cent in the second quarter, while analysts on average had expected a rise of 12.2 per cent, according to IBES data from Refinitiv.

The company has been looking to lure customers by diversifying its offering and boosting its online presence in a highly competitive retail industry that includes traditional sportswear makers like Nike and UnderArmour.

Lululemon’s revenue rose 22 per cent to US$883.4 million in the quarter ended Aug. 4 from a year earlier, as investments made in boosting sales at company-owned stores and online businesses paid off. Analysts on average had expected revenue of US$845.7 million. Excluding items, Lululemon earned 96 cents per share, beating analysts’ estimates of 89 cents.

The double-digit increase in comparable sales — a closely watched measure in the industry — marks the seventh straight quarter it’s been above 10 per cent — a rare achievement in retail.

The company’s 10th consecutive profit beat is another sign that demand for US$98 yoga pants and US$68 men’s tank tops remains strong.

Chief executive Calvin McDonald said the company made progress in all of its main areas of focus. These areas broadly include creating momentum with new products — especially for men — while boosting digital sales and expanding into overseas markets like China, where it just relaunched an e-commerce site.