Lululemon Athletica Inc. (NASDAQ: LULU), a leading retailer of athletic apparels, Thursday said its fourth-quarter earnings rose in double digits amid strong comparable store sales growth. Total revenues beat analysts’ forecast.
The market turmoil triggered by the Covid-19 outbreak continues to take a toll on the company’s operations and it was forced to temporarily close stores and cancel store-based events, including in China where it has significant presence.
Net profit rose to $298.02 million or $2.28 per share from $218.47 million or $1.65 per share a year earlier. Analysts has predicted a slightly lower number for the most recent quarter.
The solid bottom-line growth reflects strong demand across all product categories and markets. At $1.40 billion, fourth-quarter revenues were up 20% year-over-year and above the consensus forecast. Total comparable sales moved up 20%, with same store sales gaining 9% and direct to consumer sales climbing 41%.
Calvin McDonald, CEO of Lululemon, said, “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.”
During fiscal 2019, Lululemon repurchased 1.1 million shares at an average cost of $164.26 per share. However, it did not provide guidance for fiscal 2020 in view of the increasing uncertainty in markets across the globe due to the epidemic.
It is a rough road ahead for store operators, including apparel retailers like Lululemon, due to the coronavirus-induced uncertainty. The setback, which came after a relatively weak holiday season, has dampened the market sentiment.
The majority of the retail stores are set to remain closed in the near future, thanks to the social distancing campaign. Also, the deterioration of the situation in recent weeks has added to the fears that a recession is imminent.
Lululemon’s stock has fallen over 16% in the past three months and 18% since last month. It closed Thursday’s regular trading higher but slipped into the negative territory during the extended session.
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