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lululemon athletica inc. LULU has announced an upward revision to its revenues and earnings for the fourth quarter of fiscal 2024, driven by stronger-than-anticipated demand during the holiday season.
According to Meghan Frank, lululemon’s CFO, customer response to the brand’s product offerings during the holiday season had been particularly favorable, contributing to the company’s increased guidance. Revenues are now expected to grow 11-12%, reaching $3.56-$3.58 billion, up from the previous forecast of $3.48-$3.51 billion. When adjusting for the additional 53rd week in fiscal 2024, this equates to organic growth of 6-7%.
The leading athleisure retailer also raised its profit outlook, now projecting fourth-quarter earnings per share to range between $5.81 and $5.85, up from its previous guidance of $5.56 to $5.64.
lululemon anticipates a 30-basis-point increase in gross margin compared to the fourth quarter of fiscal 2023. This is a notable improvement over the prior guidance, which projected a decrease in gross margin by 20 to 30 basis points. Furthermore, the company expects deleverage in selling, general and administrative (SG&A) expenses to be 80 to 90 basis points, an improvement from its earlier estimate of 90 to 100 basis points.
LULU Positioned for Long-Term Success
lululemon’s strong brand positioning continues to be a key factor driving its success, both domestically and internationally. The company's commitment to offering high-performance, premium athletic apparel sets it apart in a competitive market. lululemon’s focus on innovation, with frequent updates to product lines and seasonal newness, ensures that its offerings remain relevant and appealing to its growing customer base.
The company’s successful global expansion is another critical factor fueling its growth. With a well-executed strategy in international markets, particularly in regions such as China, lululemon has seen strong acceptance of its brand and is effectively connecting with customers through localized marketing and product offerings. This international push is further supported by lululemon’s ability to optimize store locations and enhance the customer shopping experience.
lululemon's commitment to improving the customer experience, whether through its online or in-store channels, strengthens its position in the market. The company has demonstrated agility in responding to market trends and customer preferences, including enhancing its membership program and expanding its assortment to cater to diverse customer needs. As consumer demand for both athletic wear and lifestyle products continues to rise, lululemon’s strategic focus on product diversification, customer engagement and premium positioning places it well for sustained long-term growth.
The LULU stock, which currently carries a Zacks Rank #2 (Buy), has risen 38.7% in the past three months compared with the industry’s growth of 14.4%.