Lululemon forecasts bumper 2019 on online sales boost

(Reuters) - Lululemon Athletica Inc on Wednesday forecast full-year profit above analysts’ estimates, suggesting that demand for the Canadian clothing chain’s yoga wear was showing little signs of slowing, sending its shares up 9 percent in extended trading.

FILE PHOTO: People walk past a store by yogawear retailer Lululemon Athletica in New York City, U.S., March 30, 2017. REUTERS/Brendan McDermid

The company, which popularized athleisure trend by turning pricey women’s yoga wear into mainstream fashion, has been investing heavily to boost its online presence and offering more menswear to lure customers in a highly competitive retail industry.

Those efforts have translated into soaring sales in its direct-to-consumer business, which reported a 37 percent jump in revenue in the fourth quarter.

Online sales in China were particularly robust, rising over 140 percent in the quarter, Chief Operating Officer Stuart Haselden said on a post-earnings conference call.

The company has been ramping up its online spending in China, South Korea and Japan, seen as its next big markets.

Lululemon’s investments in stores and digital have led to better showcasing of its products, while making buying more convenient, GlobalData Retail analyst Neil Saunders said.

The company expects 2019 earnings per share of $4.48 to $4.55, while analysts were expecting $3.61 per share, according to IBES data from Refinitiv.

The company also posted a 16 percent rise in quarterly same-store sales, with the holiday season quarter accounting for more than a third of its 2018 revenue.

“Lululemon has delivered one of its strongest years yet, a result of broad-based strength across the business,” said Chief Executive Officer Calvin McDonald in a statement.

The company’s net income rose to $218.5 million, or $1.65 per share, in the quarter ended Feb 3 from $119.8 million, or 88 cents per share, a year earlier.

Excluding one-time items, the company earned $1.85 per share, beating the average analyst estimate of $1.74 per share.

Total revenue rose about 26 percent to $1.17 billion.

Reporting by John Benny in Bengaluru; Editing by Anil D’Silva