VANCOUVER — Lululemon Athletica Inc. is planning to expand its product offering and roll out a national loyalty membership plan after its profit surged more than 80 per cent in its most recent quarter, blowing past analysts’ expectations.
The Vancouver-based company reported net income of US$218.5 million for the fourth quarter ended Feb. 3, 2019, up 82 per cent from US$119.8 million in the same quarter the previous year.
Reporting in U.S. dollars, Lululemon’s adjusted earnings per share amounted to $1.85, up from $1.33 in the fourth quarter of the previous year. Analysts surveyed by Thomson Reuters Eikon expected adjusted earnings per share of $1.74.
“These results cap off one of the strongest years ever for the company,” said CEO Calvin McDonald Wednesday during a conference call with analysts.
Lululemon anticipates continued strength. For the 2019 financial year, it expects net revenue of between $3.7 billion and $3.74 billion based on a total comparable sales increase in the low-double digits on a constant dollar basis. That assumes average foreign exchange rates for the period will remain constant with the average rates for the same period the previous year.
Traffic was a key driver through 2018, said McDonald, and the company expects that momentum has carried over.
The company sees its men’s clothing as one of the largest areas for future growth. Executives believe the company can be a dual-gender brand with the men’s business just as big as the women’s side.
McDonald said the company also sees great opportunity from tests it conducted with a selfcare line including deodorant and shampoo, which he sees as a natural extension for the brand. Lululemon will share more details on its plans for that category at its analyst day in New York next month, he said.
Lululemon also recently expanded its pilot of a loyalty program to Denver, where it claimed the test exceeded expectations.
The pilot initially launched in Edmonton with an annual cost of C$128 that included a pair of bottoms, as well as expedited shipping for online purchases and other perks.
The Denver pilot cost members US$148 and confirmed the company’s belief there’s great value in the membership, McDonald said, adding the company will continue to run tests before a national rollout in the coming quarters or year.
He touted the retailer’s potential outside of North America, specifically highlighting China, and potential for growth in digital sales as it ramps up its online strategy with new international websites in several countries soon to be launched.
Net revenue was $1.2 billion for the quarter, up nearly 26 per cent from the same quarter the previous year when it reported $928.8 million.
Net income for the year was $483.8 million compared to $258.7 million the previous year. Adjusted diluted earnings per share were $3.84 compared to $2.59 in 2017.
Net revenue for the year was $3.29 billion, up 24 per cent from $2.65 billion a year earlier.
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Aleksandra Sagan, The Canadian Press