Lululemon Athletica Inc forecast annual sales and profit above Wall Street estimates on Tuesday, betting that demand for its pricier yoga wear and athleisure clothing would hold strong even as inflation drags consumer spending.
Shares of the company rose 3 percent in extended trading after its holiday-quarter sales also beat market expectations.
Even as stubbornly high prices of essential goods force customers to cut down on discretionary purchases such as apparel, wealthier shoppers are still spending on Lululemon’s tops, yoga pants and shorts, bolstering traffic both online and in stores.
While Lululemon has offered more discounts to clear excess inventories, a move that has squeezed margins, analysts have noted that the company’s top-selling products and core categories are still selling at full price.
The company said it expects fiscal 2023 revenue between $9.30 billion and $9.41 billion, compared with analysts’ average estimate of $9.14 billion, according to Refinitiv IBES data.
Lululemon expects full-year profit in the range of $11.50 to $11.72 per share, compared with analysts’ estimate of $11.26 per share.
By Deborah Sophia in Bengaluru; Editor Shilpi Majumdar
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Lululemon Tumbles After Lowering Profitability Forecast
Lululemon Athletica Inc. shares tumbled after the maker of fitness wear lowered its guidance for gross margin, stoking fears about profitability for a second-straight quarter.
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