Lululemon Athletica Tops Earnings. The Stock Falls on Soft Holiday Guidance.

Fourth-quarter revenue will range between $3.14 billion to $3.17 billion, the company said, just under consensus calls for $3.18 billion. The company’s earnings range of $4.85 to $4.93 also fell shy of calls for $4.94 a share for the fourth quarter.

“We’re happy with our start to the holiday season but with nearly two-thirds of the quarter still in front of us we remain prudent in our planning,” said Meghan Frank, Lululemon’s chief financial officer, on a call with investors.

The company’s management pointed out that macroeconomic uncertainty could still curb spending in the latter half of the quarter, especially among men, who CEO Calvin McDonald says are becoming slightly more conservative in their apparel purchases.

While Lululemon’s guidance “appears to be light,” Matthew Jacob, equity analyst at M Science, notes that the company tends to guide conservatively so it can beat its guidance, as it did in the third quarter.

Indeed, for fiscal 2023, predicted revenue will be between $9.55 billion and $9.59 billion, slightly higher than previous guidance for $9.51 billion to $9.57 billion. Adjusted earnings per share will range from $12.34 to $12.42. Past guidance was for earnings to range between $12.02 to $12.17.

Third-quarter revenue of $2.2 billion jumped 19% year-over-year, and was slightly higher than consensus calls for $2.19 billion. Same-store sales rose by 13%, in line with calls for a 12.9% increase.

The surge in revenue came from new and existing clients, the company said, with Lululemon taking 1.5 points of market share in the U.S. this quarter.

Adjusted earnings were $2.53 a share. Consensus estimates from aggregator site
FactSet
had Lululemon’s earnings coming in at $2.28 a share. The adjusted figures exclude 72.1 million of expenses related to the company’s decision to restructure its Lululemon Studio business, which includes the decision to stop selling its Mirror exercise hardware.

Lululemon also authorized a new $1 billion share repurchase program.

Shares of Lululemon have gained 45% this year.

Write to Sabrina Escobar at sabrina.escobar@barrons.com