Workout apparel maker Lululemon (LULU) topped fourth-quarter estimates but gave mixed full-year guidance late Tuesday. LULU stock fell.
Estimates: Analysts expect EPS of $2.49, 9% above the year-ago quarter, on revenue of $1.66 billion, a 19% increase from last year, according to Zacks Investment Research.
Comparable sales are seen rising 10.1%, or 11.4% on a constant currency basis, according to Consensus Metrix.
Results: EPS of $2.58 on revenue of $1.73 billion, as direct-to-consumer net revenue soared 94%. Comparable sales increased 21%, or 20% on a constant dollar basis. But adjusted operating margin decreased 290 basis points to 26.9%.
Outlook: Q1 EPS of 86-90 cents, above consensus for 84 cents, on revenue of $1.1 billion-$1.13 billion, above consensus for $1.01 billion. Full-year EPS of $6.30-$6.45, below consensus for $6.65, on revenue of $5.55 billion-$5.65 billion, above views for $5.41 billion.
Also last quarter, Lululemon began selling the $1,500 Mirror at-home exercise equipment maker in 18 stores and on its website. It bought the startup for $500 million in 2020.
The Mirror competes with Peloton (PTON)’s interactive exercise bikes, as well as Apple’s (AAPL) Fitness+ app. Nike (NKE) has also been expanding in at-home fitness while its apparel competes with Lululemon’s.
China could also emerge as a more important market for Lululemon, according to Landon Luxembourg, senior analyst at Third Bridge.
“Lululemon has invested in the Chinese market for several years, they have a small base compared to Adidas and Nike but they have built up a community network which is effective at driving consumer acquisition,” he said.
“The Chinese market for athletic apparel has recently undergone a huge transition with a big push to increase the physical fitness of the population and a lot of government investment in sporting facilities.”
As the economy reopens, retailers like Lululemon face supply-chain issues related to port congestion and container shortages. Shipping congestion caused by the blockage at the Suez Canal last week may also cause ripples among suppliers.
Nike reported reported mixed fiscal third-quarter results earlier this month. North America revenue declined 10% to $3.56 billion due to supply chain challenges, including global container shortages and U.S. port congestion.
Meanwhile, Peloton could also be an emerging competitor in apparel as it recently partnered with German athletic-gear giant Adidas (ADDYY).
Please follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
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