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By Brian Nelson, CFA
On March 27, Lululemon (LULU) reported better than expected fourth quarter results with revenue and GAAP earnings per share coming in ahead of what the Street was looking for. Net revenue advanced 13% (14% on a constant dollar basis), with Americas net revenue up 7% (8% on a constant dollar basis) and international net revenue advancing 38% (40% on a constant dollar basis). Comparable sales, which excludes net revenue from the 53rd week of 2024, increased 3%, or 4% on a constant dollar basis.
Management had the following to say about the quarter:
Our fourth quarter results exceeded our expectations as we continued to introduce more newness and innovation into our product assortment. Our performance demonstrates the ongoing strength and resilience of lululemon and is a testament to the passion and dedication of our teams around the world. As we begin 2025, we remain focused on executing on our Power of Three ×2 growth plan and delivering an exciting pipeline of innovation and brand activations for our guests and communities.
Lululemon’s gross profit increased 15% in the quarter, with its gross margin increasing 100 basis points, to 60.4%. Income from operations advanced 14%, while its operating margin increased 40 basis points, to 28.9%. Diluted earnings per share came in at $6.14 compared to $5.29 in the fourth quarter of 2023. During the quarter, Lululemon repurchased 0.9 million of its shares for a cost of $332.2 million, while it opened 18 net new company-operated stores, ending with 767 stores.
Lululemon ended 2024 with $2.0 billion in cash and cash equivalents, while inventories increased by 9%, to $1.4 billion at the end of the year. For 2025, Lululemon expects net revenue in the range of $11.15-$11.3 billion, representing growth of 5%-7%, or 7%-8%, excluding the 53rd week of 2024. Diluted earnings per share are expected to be in the range of $14.95-$15.15 for the year, assuming a tax rate of approximately 30%. The company continues to execute on its Power of Three x2 growth plan calling for the doubling of the business from 2021 net revenue of $6.25 billion to $12.5 billion by 2026.
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Brian Nelson owns shares in SPY, SCHG, QQQ, QQQM, DIA, VOT, RSP, and IWM. Valuentum owns SPY, SCHG, QQQ, QQQM, VOO, and DIA. Brian Nelson’s household owns shares in HON, DIS, HAS, NKE, DIA, RSP, SCHG, QQQ, QQQM, and VOO. Some of the other securities written about in this article may be included in Valuentum’s simulated newsletter portfolios. Contact Valuentum for more information about its editorial policies.
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