Lululemon Athletica Inc. lifted its full-year outlook as it takes business from competitors and defies the broader retail slump.
(Bloomberg) — Lululemon Athletica Inc. lifted its full-year outlook as it takes business from competitors and defies the broader retail slump.
The results reinforce that shoppers — particularly those at the higher end of the income spectrum — are opening their wallets for popular brands despite broader uncertainty across retail.
Comparable sales rose 11% in the second quarter, without accounting for currency variations, which was in line with forecasts. Earnings per share, excluding some items, were $2.20, below the consensus $2.54.
“Our continued ability to gain market share and bring new customers into the brand illustrates the significant runway ahead for Lululemon,” Chief Executive Officer Calvin McDonald said in a statement.
Lululemon shares rose 1.2% at 5:22 p.m. in extended trading in New York. The stock has advanced 19% this year through Thursday’s close, trailing the 42% gain for the Nasdaq 100 Stock Index.
Inventories rose by less than expected in the quarter, though they were still higher than a year ago. Executives said in June that they expected inventory levels to dip slightly, and then to be relatively in line with sales growth in the second half of this year.
Sales in international markets rose 52%, driven by the reopening of China and store openings in regions including Thailand. In North America, sales rose 11%, suggesting that Lululemon is maintaining growth domestically even as it looks to expand its presence abroad.
“In every region we’re in, we’re profitable,” McDonald said on a call with analysts, noting that international markets now make up more than 20% of overall sales. “We really are just getting started.”
See also: Discounts Make a Comeback as Shoppers Get Picky About Spending
Lululemon’s results, coupled with strong sales growth at Abercrombie & Fitch Co. and Urban Outfitters Inc. last week, show a growing divide between winners and losers in the apparel retailer space. While specialty retailers that cater to higher-income shoppers outperform, others, such as Macy’s Inc., Kohl’s Corp. and Gap Inc., are struggling to keep up.
(Updates with details, quotes from a call with analysts.)
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