Lululemon just reported better-than expected results for the first quarter amid what has been a rough quarter for other apparel and footwear retailers.
The Vancouver, British Columbia-based athleisure brand reported that first quarter net revenues increased 32% to $1.6 billion versus an expected $1.53 billion. In North America, revenues increased 32%. Earnings per share were $1.48 compared to an expected $1.43.
“Continued momentum in the business enabled us to achieve a strong start to the year,” said CEO Calvin McDonald in statement, noting challenges in the current business environment. “These results provide a solid foundation as we begin our next five-year journey and deliver against our new Power of Three ×2 growth plan.”
In April, Lululemon announced a plan to expand its men’s business, including the addition of footwear, as part of a larger five-year growth strategy to double revenue to $12.5 billion by 2026. Lululemon launched footwear for women earlier this year.
Notably, DTC net revenue in Q1 increased 32% and now represents 45% of total net revenue compared to 44% in Q1 of 2021.
Lululemon shares were up over 1% in after hours trading on Thursday evening.
CFO Meghan Frank noted that the guidance hike and earnings and revenue beat comes during ongoing pressures related to COVID-19, supply chain slowdowns and inflation.
“While we are not immune to these challenges, our omni operating model, balanced growth strategy, and unique approach toward innovation enable the positive results we are reporting today and anticipate for the full year,” Frank said.
Lululemon raised its outlook for fiscal 2022 and expects net revenue to be between $7.61 billion to $7.71 billion. The company also expects diluted earnings per share between $9.42 and $9.57 for the year.
The positive earnings report comes as other retailers report earnings misses due to industry-wide headwinds. Last month, Target and Walmart both reported earnings for Q1 that fell short of analysts’ estimates. Both big-box retailers said sales had been impacted by a general consumer shift away from from discretionary to non-discretionary categories such as groceries, given the highly inflationary environment.
Dick’s Sporting Goods and Hibbett Sports also also posted weak outlook after reporting results for this first quarter that were impacted by inflationary pressures and the lack of stimulus checks.