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Lululemon Athletica Inc. expects fourth quarter sales to surpass the market’s expectations, showing the upscale activewear brand is fending off upstart competitors and slower growth in consumer spending.
Revenue will rise between rise between 11 percent to 12 percent and be in the range of $3.56 billion to $3.58 billion, up from previous guidance for revenue of as much as $3.51 billion. That surpassed the average estimate of analysts compiled by Bloomberg.
Shoppers “responded well to our product offering” during the holiday season, said chief financial officer Meghan Frank in a statement.
The shares rose as much as 6.9 percent in premarket trading on Monday in New York. Lululemon will be meeting with analysts and investors at this week’s ICR Conference.
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Lululemon also raised its earnings per share guidance to a range of $5.81 to $5.85, up from as much as $5.64.
Chief executive officer Calvin McDonald is betting the company can reignite demand by expanding its styles and embracing fashion trends that are moving away from the form-fitting clothing that Lululemon is known for.
Lululemon’s strategic plan sees the company reaching $12.5 billion in annual revenue by 2026. It intends to reach that target in part by growing internationally, expanding online sales and selling more products to men.
The company’s success has also attracted a number of rivals, which now offer products like its signature yoga pants at lower prices.
By Kim Bhasin and Lily Meier
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When the company reports earnings today, analysts expect another quarter of slowing growth. The question is whether Lululemon’s ongoing slowdown is temporary or a sign that the brand is trapped in a downward spiral.
