Following the rise in its first-quarter profits and a revision to its full-year profit outlook, shares of Lululemon Athletica Inc. (NASDAQ: LULU) rose on Friday.
Lululemon expects to earn between $9.42 and $9.57 per share in fiscal 2023, a 25 percent increase from its previous predictions. The company also expects a full-year 2022 revenue between $7.61 billion and $7.71 billion, up from its previous forecast of $7.49 billion to $7.62 billion.
To counteract their rising input costs and air freight charges, the Vancouver-based retailer imposed a “select price hike” in the three months that ended in April. This resulted in an adjusted $148 per share on sales of $1.6 billion. This means that profits remained at or around pre-pandemic levels, at 16.1%.
On a conference call with investors on Thursday night, CEO Calvin McDonald said that his company “does not utilize promotional pricing as means to boost top-line sales.” Therefore, we carefully plan our pricing tactics and closely track our guests’ reactions.
Although I remain hesitant about raising pricing during this uncertainty, we will continue to assess and take a cautious approach to this plan,” he said. “
At a premarket price of $1.32 higher, Lululemon stock is expected to start at $306.58, a 21.8% drop from last year.
Plus, the shares of Lululemon have a $303 price target and an ‘overweight’ rating, according to Morgan Stanley’s analyst, Kimberly Greenberger. “Lululemon has been one of Softline’s few retailers who can boost their full-year guidance amid macro/supply chain instability,” Greenberger said.
According to Greenberger, we think that the current market prices provide an appealing entry opportunity, with rising underlying growth and a client base largely protected from macro challenges.
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