lululemon athletica inc. (NYSE:LULU) saw a 2.1% increase in its after-market trading on Mar 21, following the release of its strong fourth-quarter fiscal 2023 results, which surpassed the Consensus Estimate and showed year-over-year improvement in revenues and earnings.

The company credited its success to innovative product offerings and a robust business model, highlighting progress on its Power of Three X2 growth plan. It also provided guidance for the fiscal first quarter and fiscal 2024.

lululemon’s fiscal fourth-quarter earnings were $5.29 per share, up from $4.40 per share in the year-ago period. This exceeded the Consensus Estimate of $5.01 per share. Quarterly revenues grew 15.6% year over year to $3,205.1 million, surpassing the Consensus Estimate of $3,189 million. Net revenues in North America rose by 9%, while internationally they surged by 54% (56% on a constant-dollar basis).

Total comparable sales increased by 12% year over year, with comparable store sales up 5% and e-commerce net revenues up 17%. Comparable sales in the Americas increased by 7%, while internationally they grew by 43% (44% on a constant-dollar basis).

The company’s adjusted gross profit increased by 20% year over year to $1.9 billion, with an adjusted gross margin of 59.4%, up 200 basis points from the previous year. This expansion was driven by a 210-basis-point increase in product margin, attributed to lower ocean freight costs and reduced air freight use.

SG&A expenses were $989.5 million, up 23.2% from the year-ago quarter, resulting in an SG&A expense-to-net-revenue ratio of 30.9%, a 190-basis-point increase from the prior year.

Adjusted operating income in the fiscal fourth quarter increased by 16% year over year, with an adjusted operating margin of 28.5%, up 20 basis points from the previous year.

In terms of store expansion, lululemon opened 25 net new stores and completed 15 store optimizations in the fiscal fourth quarter, bringing its total store count to 711.

For the first quarter of fiscal 2024, lululemon plans to open one net new company-operated store. For the full fiscal 2024, it anticipates opening 35 to 40 net new company-operated stores and completing approximately 40 co-located optimizations, resulting in overall square footage growth in the low double digits.

lululemon exited the quarter with $2,244 million in cash and cash equivalents and $4,232.1 million in stockholders’ equity. It had $393.7 million remaining under its committed revolving credit facility.

Looking ahead, lululemon expects net revenues of $2.175-$2.200 billion for the first quarter of fiscal 2024, indicating 9-10% year-over-year growth. It expects gross margin to be nearly flat with the first quarter of fiscal 2023, with EPS in the range of $2.35-$2.40 per share.

For fiscal 2024, lululemon anticipates net revenues of $10.7-$10.8 billion, suggesting growth of 11-12%. EPS is expected to be $14.00-$14.20, with an effective tax rate of 30%.

As part of its Power of Three X2 growth plan, lululemon aims for net revenues of $12.5 billion by 2026, indicating significant growth from the 2021 reported figure of $6.25 billion.

Featured Image: Unsplash @ Marco Tjokro

Please See Disclaimer