Lululemon plans to increase profits in 2023 amid rising demand and lower costs

Budrigannews.com – Lululemon Athletica Inc.’s shares rose nearly 13% in extended trading on Tuesday as the athleisure clothing manufacturer capitalizes on robust demand and a decreasing inventory glut to forecast annual sales and profits that exceed Street estimates.

After taking a 300-basis-point hit in the holiday quarter, the company also dispelled concerns regarding a deeper squeeze on margins by citing lower costs associated with air freight and fewer markdowns.

Lululemon, which is based in Vancouver, Canada, has benefited from wealthy customers still purchasing its more expensive tops, yoga pants, and shorts, as opposed to the general trend of customers who are concerned about inflation cutting back on discretionary spending.

The company has also been able to sell more of its popular products, like Align (NASDAQ:), thanks to a loyal customer base. yoga pants with a high rise that cost anywhere from $98 to $118 at full price.

In comparison to pre-pandemic levels in 2019, markdowns only increased by 40 basis points in the holiday quarter, and they are anticipated to remain flat in 2023.

“Lululemon is doing a truly great job bringing individuals into the brand,” Raymond James examiner Rick Patel said, adding new item dispatches, for example, its tennis and climbing items are assisting gain wallet with dividing between customers.

Lululemon, on the other hand, is making good progress in getting rid of its excess inventory. At the end of the fourth quarter, inventories increased by 50% to $1.4 billion, compared to an increase of 85% at the end of the previous quarter.

In the current quarter, it anticipates a 30% to 35% increase in inventory.

According to data from Refinitiv IBES, Lululemon stated that it anticipates earning between $9.30 billion and $9.41 billion in fiscal 2023. This is higher than the $9.14 billion that analysts typically estimate.

The organization figure entire year benefit in the scope of $11.50 to $11.72 per share, contrasted and experts’ gauge of $11.26.

Lululemon additionally gave peppy figures for the main quarter, and beat assumptions for final quarter results.