Lululemon Athletica Inc. LULU-Q on Thursday raised its annual profit and revenue forecasts as demand from affluent customers for its new belt bags, golf and tennis clothing cushions the blow from a cut in spending by lower-income households.
Shares in Lululemon, which also posted upbeat second-quarter results, rose nearly 8 per cent in extended trading.
Higher-income households have largely shrugged off the impact of steeper prices of everyday essentials to splurge on discretionary goods including apparel and bags, buoyed by their savings during the lockdowns.
Lululemon has tapped into its loyal customers by entering categories including footwear and expanding its men’s line to sustain its athleisure-led pandemic sales momentum, outperforming peers Athleta and Sweaty Betty in 2022 so far.
Analysts have also said discounts at Lululemon, which has a relatively fresh stock, have risen only marginally in recent weeks while other apparel retailers have had to cut prices sharply to offload out-of-style inventory.
Boosted by a strong second quarter, Lululemon raised its net revenue forecast for 2022 to between US$7.87-billion and US$7.94-billion from US$7.61-billion to US$7.71-billion.
The company forecast 2022 adjusted earnings per share between US$9.75 and US$9.90, compared with its previous outlook of US$9.35 to US$9.50.
Wall Street analysts expect annual earnings of US$9.44 per share on net revenue of US$7.69-billion, according to IBES data from Refinitiv.
The company’s second-quarter net revenue rose 29 per cent to US$1.87-billion, beating estimates of US$1.77-billion.
Net income for the quarter rose to US$289.5-million, or US$2.26 per share, from US$208.1-million, or US$1.59 per share, a year earlier.
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