Lululemon, a leading athletic apparel retailer, reported stronger-than-expected earnings for the first quarter of 2024 despite facing inventory issues and slowing sales growth in its largest market, the Americas. The company's stock surged in after-hours trading as it raised its full-year profit outlook and announced a $1 billion increase to its share buyback program.
According to reports, Lululemon faced inventory issues with the wrong sizes and colors in stores, leading to out-of-stock products. However, CEO Calvin McDonald mentioned strong momentum in international markets and optimizing U.S. product assortment as potential growth areas for the brand.
Despite these challenges, Lululemon beat Wall Street's earnings estimates by a narrow margin and reported net income of $318 million, up from $295 million in the same quarter last year. Sales increased by 7% to $1.4 billion, missing analyst expectations of $1.42 billion.
The company maintained its previously given full-year revenue forecast in a range of $10.7 billion to 10.8 billion but raised its earnings per share outlook from a range of $5.63 to $5.73 to a new range of $5.90 to $6.
Lululemon's stock, which had been down about 40% year-to-date, rose more than 10% in after-hours trading following the earnings report.
Investors and analysts remain optimistic about Lululemon's growth potential both domestically and internationally. However, concerns over inventory management and competition from newer brands like Alo and Vuori continue to impact the stock's performance.
