The Vancouver-based company, renowned for its athleisure and comfortable clothing, faces shifting consumer behavior amid rising living costs. Lululemon’s holiday forecast aligns with a broader trend observed among U.S. retailers, indicating a potentially turbulent start to the holiday season.
For the fourth quarter, Lululemon forecasts net revenue between $3.14 billion and $3.17 billion, with a profit ranging from $4.85 to $4.93 per share—both below analysts’ estimates. While Thanksgiving weekend sales displayed optimism, consumer spending patterns suggest caution, with some individuals either cutting back on expenditures or delaying purchases until closer to Christmas.
The Commerce Department’s Bureau of Economic Analysis recently reported a slowdown in consumer demand as Americans grapple with higher borrowing costs, resumed student loan repayments, and diminished excess savings, particularly among low-income households affected by inflation.
Despite the challenging outlook, Lululemon’s third-quarter results exceeded expectations, with a 110 basis point increase in gross margins to 57%, attributed to reduced production costs and lower freight expenses. Additionally, Lululemon raised its annual profit and revenue forecasts for the full year 2023, now expecting a profit between $12.34 and $12.42 per share and net revenue between $9.55 billion and $9.59 billion. This upward revision surpassed the earlier estimates of $12.02 to $12.17 per share in profit and $9.51 billion to $9.57 billion in net revenue.
