The Canadian sportswear supplier Lululemon Athletica Inc. closed the 2022/23 financial year with surprisingly strong results. Sales increased sharply, while profits fell due to negative special effects, but also exceeded market expectations. The figures published on Tuesday evening and optimistic forecasts for the current year ensured that the company’s share price immediately rose by more than twelve percent.
In its most recent fiscal year, which ended on January 29, the Vancouver-based yoga apparel specialist posted sales of $8.11 billion, a 30 percent increase over 2021-22 . Adjusted for exchange rate changes, revenues grew by 32 percent. The company ended the year with an better-than-expected final quarter, with revenue increasing 30 percent (+33 percent at constant currency) to $2.77 billion.
A slight decline in gross margin and special charges of more than $440 million, mainly resulting from impairments in the digital fitness division, weighed on the result. The operating profit of 1.33 billion US dollars was slightly below the previous year’s level (-0.4 percent). Reported net income fell 12.4 percent to $854.8 million (€789.3 million). However, adjusted for special effects, it increased by 27.0 percent to USD 1.29 billion.
The company also announced further reforms to its digital membership program, Lululemon Studio. This emerged from the start-up Mirror, which Lululemon acquired in the summer of 2020 during the Covid 19 pandemic for half a billion US dollars. However, after the end of the pandemic-related restrictions and the reopening of the fitness studios, the expensive acquisition, which offers digital home fitness programs and the right equipment, could not meet the high expectations. The company now wants to attract more users to its digital offering through the introduction of a cost-effective guest access planned for the coming summer.
Management forecast further strong growth for 2023/24. Sales are expected to increase by about 15 percent over the previous year to between 9.30 and 9.41 billion US dollars. It is also targeting diluted earnings per share of between $11.50 and $11.72. Last year it was 6.68 US dollars, adjusted for special effects it amounted to 10.07 US dollars.