Lululemon Athletica stock surged 14.56% in premarket trading after the company beat earnings expectations and issued better-than-expected guidance for the current fiscal year.
Lululemon reported adjusted earnings of $4.40 a share for its fourth quarter, topping analysts’ expectations for $4.26 a share. Sales jumped 30% to $2.8 billion, over estimates for $2.7 billion.
Gross margins performed worse than expected, declining 3 percentage points to 55.1%, worse than the company’s guidance for a decline ranging between 0.9 and 1.1 percentage points. Lululemon had previously warned investors that margins were under pressure thanks to overburdened inventories. In the fourth quarter, inventories were up 50% compared with the same period in 2021. While still elevated, it marks an improvement from the third quarter, when inventories increased by 85%.
Still, shares of Lululemon rose 5.3% to $337.88 in after-hours trading, buoyed by the company’s optimistic guidance for the current fiscal year.
First-quarter earnings will range between $1.93 and $2 a share for the first quarter, the company said. Analysts were forecasting earnings to be $1.64 for the quarter.
For the current fiscal year, the company expects net revenue to range between $9.3 billion and $9.41 billion, better than consensus expectations for $9.1 billion.
“As we enter 2023, we look forward to another year of strong momentum across the globe,” said CEO Calvin McDonald.
