Lululemon's stock drops on soft revenue forecast

By Jon Swartz

Lululemon Athletica Inc.'s stock slumped 11% in after-hours trading Thursday after the retail company posted quarterly results that topped analysts' revenue and earnings estimates but offered light guidance.

Lululemon (LULU) reported fiscal fourth-quarter net income of $669.5 million, or $5.29 a share, compared with net income of $119.8 million, or 94 cents a share, in the same quarter a year ago.

Revenue jumped 16% to $3.21 billion from $2.8 billion in the year-ago quarter.

"As we step into 2024, we are focused on the significant opportunities ahead for lululemon as we navigate the dynamic retail environment and deliver for guests through innovative new products and brand activations," Lululemon Chief Executive Calvin McDonald said in a statement announcing the results.

The company's gross profit increased 25% to $1.9 billion, while adjusted gross profit soared 20% to $1.9 billion.

Analysts surveyed by FactSet had expected on average net income $5 a share on revenue of $3.19 billion.

Lululemon provided first-quarter sales guidance of $2.18 billion to $2.2 billion, while FactSet analysts are forecasting $2.26 billion. For the fiscal year, Lululemon is projecting $10.7 billion to $10.8 billion in sales, short of the $10.94 billion predicted by analysts on FactSet.

UBS analysts predicted as much in a note earlier this week. They said trends pointed to "soft" first-quarter guidance with a "low probability" " that Lululemon's full-year guidance beats expectations. "We envision a scenario where LULU's FY24 guide is in-line, but the stock falls on a weak Q1 outlook," they wrote.

Shares of Lululemon have gained 55% over the past year, while the broader S&P 500 index has increased 33%.

-Jon Swartz

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03-21-24 2025ET

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