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Lululemon (LULU) reports the fourth quarter profit hit

Lululemon on Thursday announced fiscal fourth quarter results that exceeded expectations, as same-store sales increased 20% over the period; thanks in part to more men who shop in their stores and online.

However, because of the uncertainty from the coronavirus pandemic, the yoga belly maker said it will not present a fiscal outlook for 2020 at present. Its stock fell by about 2% in the aftermarket.

Here’s what the company did in the fourth quarter compared to what analysts expected, based on Refinitive data:

  • Earnings per share: USD 2.28 versus USD 2.24 expected
  • Revenue: $ 1
    .40 billion, compared to $ 1.38 billion expected

Net income rose to $ 298 million, or $ 2.28 per share, from $ 218.5 million, or $ 1.65 a share, a year ago. It was better than the $ 2.24 per share that analysts expected to earn, based on Refinitive data.

Net sales grew approximately 20% to $ 1.40 billion from $ 1.17 billion a year ago. Analysts demanded $ 1.38 billion in revenue.

Sales of the same store increased a total of 20%, the company says. Digital sales increased by 41% during the quarter. Men’s income increased by 32% and women’s increase by 17%.

“The strength of our brand and the strong financial situation will help us manage the day-to-day, while continuing to plan and invest in our future,” CEO Calvin McDonald said in a statement.

Due to the increased spread of COVID-19, in February, Lululemon temporarily closed all its stores in China. It said Thursday that all but one of these stores have since reopened. Earlier this month, Lululemon temporarily closed all its stores in North America, Europe, Malaysia and New Zealand due to the virus. It has also temporarily closed a distribution center in Sumner, Washington.

Based on lessons learned from China, McDonald told analysts on Thursday that he has confidence that the business “will bounce back.” He said sales in China are not yet back to their levels before stores in the region closed. But the volume is improving “week by week,” he said.

Lululemon stores in the US, Canada and other markets will reopen “market by market”, says the CEO, based on local information. “Our stores will open again. … Lululemon is in a very healthy position.” But he warned that the company plans to close stores in North America longer than they were in China.

At the same time, Lululemon has confidence that even though shoppers do not want to buy leggings and sports bra today, the retailer does not have to worry about selling goods in the future to move them off the shelves.

Much of Lululemon’s merchandise is “less seasonal in nature,” compared to other clothing categories, McDonald explained. “Styles can be kept for future use.”

“We do not believe [the coronavirus] will change the trend towards people who want to live an active and healthy lifestyle, ”he added.

To handle costs, Lululemon said it will scale back the store’s openings and redevelopments in the short term.

Lululemon shares closed on Thursday by about 3.7%. The share has fallen by about 15% this year. The company has a market value of approximately $ 26.2 billion.

Read the full press release here.

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