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Lululemon Athletica Inc shares jumped after the company gave an annual outlook that surpassed analysts’ expectations, driven by high demand for activewear, even as it deals with nagging inventory issues that ate into margins.
The stock rose 16% in early trading in New York. If the gain holds, it would be Lululemon’s biggest rise since March 2020.
The retailer expects full-year sales to grow about 15% to a range of $9.3 billion to $9.41 billion, ahead of the $9.1 billion
analyst estimate compiled by Bloomberg.
Global sales rose 30% in the fiscal fourth quarter, spurred by strong sales in both North America and abroad. Profit also exceeded expectations.
Lululemon has worked to reduce an inventory pileup that has troubled operations in recent quarters, but levels remain high, up 50% from the year prior. Cost pressures are moderating, however.
Adjusted gross margin fell 70 basis points in the quarter after a January forecast for a decline of up to 110 basis points.
The decline in adjusted gross margin was 150 basis points for the year. “After missing gross margin guidance in Q3 and lowering the Q4 margin outlook,†Wedbush analyst Tom Nikic said “there was significant investor concern†ahead of the earnings report. “Fortunately, LULU likely alleviated many of these concerns,†he said.