Lululemon shares fall after company offers weak fourth quarter guidance

Lululemon on Thursday reported sales and profit that topped estimates, but the company offered softer guidance than expected for the fourth quarter.

Shares of the company fell more than 9% after hours.

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Here’s what the company reported for the three-month period compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

• Earnings per share: $2, adjusted, vs. $1.97 expected
• Revenue: $1.86 billion vs. $1.81 billion expected

The athletic apparel retailer is a popular mall destination that’s known for its trendy — and pricey — workout apparel and loungewear. Even as inflation hits Americans’ wallets and people dress up again, investors have bet that the brand can keep drawing shoppers and getting them to spend.

Lululemon’s third-quarter net income rose to $255.5 million, or $2 per share, from $187.8 million, or $1.44 per share a year ago. Revenue rose 28% to $1.86 billion. Comparable sales rose 22%, versus an expected 19% increase, according to Street Account.

CEO Calvin McDonald said Lululemon was pleased with the start of the holiday season. Yet the company’s guidance for the quarter came in weaker than hoped. Lululemon said Thursday it expects fourth quarter per-share earnings of $4.20 to $4.30, compared to estimates of $4.30. It also sees revenue of between $2.605 billion to $2.655 billion, versus a projected $2.649 billion.

The retailer raised its full-year forecast in September, saying it expects 2022 revenue of between $7.865 billion and $7.940 billion, up from the range of $7.610 billion to $7.710 billion it stated last quarter. It also raised its adjusted earnings per share outlook to a range of $9.75 to $9.90, from last quarter’s guidance of $9.35 to $9.50 adjusted.

Shares of the company are down more than 4% so far this year. The stock has outperformed the S&P 500 Index, which is down about 17% during the same period. It closed Thursday at $374.51, bringing the market cap to $47.75 billion.