Overseas sales help alleviate weak US market, Lululemon (LULU.US) raises full-year performance outlook

Boosted by strong overseas sales performance, Lululemon (LULU.US) has raised its full-year performance expectations, indicating that the high-end athletic wear brand is resisting the impact of emerging competitors and adapting to a slowdown in consumer spending growth. The financial report shows that Lululemon's third-quarter revenue was $2.4 billion, a 9.1% increase year-over-year, exceeding market expectations; net profit was $352 million, compared to $249 million in the same period last year; diluted earnings per share were $2.87, compared to $1.96 in the same period last year, exceeding the expected $2.72. The company currently expects revenue for the fiscal year to be between $10.45 billion and $10.49 billion, higher than the previous forecast of $10.38 billion to $10.48 billion. In the third quarter, the company's international market achieved a strong 25% growth in comparable sales, while sales in the Americas declined by 2% year-over-year. Comparable sales in the third quarter increased by 4%, breaking a trend of slowing growth over the past three quarters. CEO Calvin McDonald believes the company can reignite demand, in part due to expanding product categories and launching more relaxed styles. The company's strategic plan aims to achieve annual revenue of $12.5 billion by 2026, benefiting from rapid international growth, expanded online sales, and more men's products. Neil Saunders, Managing Director of GlobalData, wrote in a research report, "This was a very robust quarter for Lululemon. The trend of slowing growth over the past three quarters has been reversed, which is a relief." Saunders added that this quarter, "The overall performance of the clothing industry was not particularly strong, so Lululemon's performance was against the trend." Lululemon's sales in the United States remained flat in the third quarter, but the CEO told analysts on Thursday that the company has the opportunity to achieve growth by introducing new products. He added that the momentum of development in all international markets of the company remains strong. Overall, revenue for the quarter ending October 27 increased by 9% to $2.4 billion, exceeding expectations, with sales in the Chinese market growing by 39%. The gross profit margin reached 58.5%, also exceeding expectations. The company was a pioneer in the athletic leisure category, attracting numerous competitors, all of whom now offer yoga pants and other products at lower prices. Jefferies Financial Group Inc. analyst Randal Konik wrote in a research report that in the current situation where consumers are still under inflationary pressure, economic growth may be more difficult to achieve in the coming quarters. He wrote, "We expect the company's U.S. business to continue to underperform as macro pressures weigh on consumers, competition intensifies, and fashion moves further away from LULU's core products."