Lululemon Athletica anticipates annual revenue and profit to remain below expectations due to weakening demand for its premium athleisure wear, particularly in North America.
In the US market, sporting goods retailers are grappling with excessive inventory levels, leading to reduced orders for sportswear and apparel companies like Adidas and Foot Locker. This cautious approach comes in response to fluctuating consumer spending patterns.
During a post-earnings call, Calvin McDonald, CEO acknowledged that Lululemon's first-quarter sales in North America are sluggish, reflecting a challenging consumer environment, particularly in the US. The company reported a mere 9 per cent growth in fourth-quarter North American sales, a significant decline from the 29 per cent increase seen a year earlier.
For fiscal year 2024, Lululemon expects revenue between $10.70 billion and $10.80 billion, falling short of analysts' estimates of $10.90 billion. Profit is projected to range between $14 and $14.20 per share, with the midpoint below the expected $14.13.
Lululemon's weaker forecast mirrors the broader struggles faced by retailers, as price pressures prompt consumers to reduce discretionary spending and opt for more affordable brands, says Rachel Wolff, Analyst, Insider Intelligence
Despite Lululemon's fourth-quarter revenue of $3.21 billion surpassing expectations, driven by the success of new styles for both men and women, such as the Cityverse casual sneaker and Beyondfeel running shoes, the company remains susceptible to prevailing consumer caution and market dynamics, adds Mari Shor, Senior Analyst, Columbia Threadneedle.
