Pedestrians were seen walking past Canadian sportswear retailer Lululemon in Shanghai.
Alex Taï | SOPA Pictures | LightRocket | Getty Images
Lululemon stock hit a record high on Thursday after the retailer defied Wall Street expectations in its most recent fiscal quarter and said it was on track to meet its 2023 revenue target before the expected date.
Shares of the sportswear maker rose more than 13% in morning trading, reaching a record high of $ 434.22. The stock last peaked at $ 417.85 on August 30. As of Wednesday, Lululemon had gained nearly 9% year-on-year, bringing its market cap to nearly $ 50 billion.
Famous for its women’s leggings and men’s “ABC” joggers, Lululemon’s sales have outperformed other retailers during the COVID pandemic. Consumers look for clothes that are comfortable to wear when working from home and exercising. Buyers spend more money on so-called athletic styles than on dresses, suits and other formal wear.
The business – and the fashion trend – benefits even when consumers leave their homes and return to schools and offices.
For its current fiscal year, Lululemon expects revenue to be between $ 6.19 billion and $ 6.26 billion, which means it will surpass a key financial target about two years ahead of schedule.
General manager Calvin McDonald told analysts on the earrings conference call that the retailer will also double its men’s clothing business and quadruple its international segment ahead of schedule. He plans to come up with new long-term financial goals after the 2021 recess.
McDonald’s said Lululemon would be “even better performer” if it weren’t for the supply chain issues that the retail industry faces today.
“If we don’t deal with some of this disruption, sales could likely be even stronger in the quarter,” the CEO told CNBC’s “Squawk Box” Thursday morning.
Cowen & Company raised its price target for Lululemon stock from $ 476 to $ 520, marking a new high on Wall Street.
According to John Cernan, Retail Analyst at Cowen, “Management has expressed great confidence in the dynamics of their business and in its first rounds of growth potential across product lines, businesses, categories and regions.
On the heels of Lululemon’s strong quarterly results, Telsey Advisory Group also raised its Lululemon share price target from $ 460 to $ 485. According to FactSet, the average Lululemon share price target now stands at $ 434.20.
While supply chain disruptions, including rising air freight costs and plant closures in southern Vietnam, remain headwinds, Lululemon said in a note to customers, the CEO and research director of Telsi Advisory, Lululemon said in a statement. factors have been taken into account in our updated approach. .
“The pandemic has accelerated Lululemon’s strategic initiatives and the company is well positioned to take greater advantage of opportunities in a post-pandemic world,” she said.
Lululemon, which also owns the connected fitness product Mirror, hopes to continue driving growth by launching products in new clothing, some of which are environmentally friendly. He still envisions higher earnings in his men’s business and in key international markets such as China.
There are also rumors that Lululemon will launch into shoes next year, which will make them a close competitor to Nike and Adidas.
McDonald’s told CNBC: “What’s accelerated is functional clothing… the wellness focus. And it’s the softest place in the brand.
Certainly, the sportswear space is only getting more competitive. Levi Strauss & Co. recently announced plans to acquire yoga clothing manufacturer Beyond Yoga. And Wolverine Worldwide – the company behind Merrell, Saucony, Sperry, Stride Right and other shoe names – recently bought rival Lululemon brand Sweaty Betty for $ 410 million.
—CNBC Michael bloom contributed to this report.