Canada's Lululemon Athletica's gross profit climbs 21% in Q3 FY23

Canadian apparel retailer Lululemon Athletica’s gross profit increased 21 per cent to $1.3 billion in the third quarter (Q3) of fiscal 2023 (FY23). The company’s adjusted gross profit also grew 23 per cent to $1.3 billion. Gross margin climbed 110 basis points to 57.0 per cent in the third quarter. Adjusted gross margin increased 220 basis points to 58.1 per cent.

In the third quarter, the company‘s net revenue rose 19 per cent to $2.2 billion. Net revenue improved 12 per cent in North America, and 49 per cent internationally. Total comparable sales grew 13 per cent or 14 per cent on a constant dollar basis in the third quarter of fiscal 2023. Comparable store sales increased 9 per cent.

Direct to consumer (DTC) net revenue went up 18 per cent, or 19 per cent on a constant dollar basis. Direct to consumer net revenue represented 41 per cent of total net revenue, same as for the third quarter of 2022, the company said in a press release.

"This was another strong quarter for Lululemon as our innovative product offerings and community activations continued to powerfully resonate with our guests globally. As we enter the holiday season, we are pleased with our early performance and are well-positioned to deliver for our guests in the fourth quarter. I am energized by the significant opportunities ahead, and would like to thank our incredible teams around the world for their continued passion and commitment to our brand,” Calvin McDonald, chief executive officer, said.

The company opened 14 net new company-operated stores during the third quarter, ending with 686 stores.

"Our third quarter performance, which exceeded our expectations on the top- and bottom-line, reflects the ongoing strength of our business model and our teams' ability to successfully execute at a high level amid an uncertain macro environment. As we look to the end of our fiscal year and into 2024, we remain focused on driving long-term growth and creating value for all our stakeholders,” Meghan Frank, chief financial officer, said.

For the fourth quarter of 2023, the company expects net revenue to be in the range of $3.135 billion to $3.170 billion, representing growth of 13 per cent to 14 per cent. Diluted earnings per share are expected to be in the range of $4.85 to $4.93 for the quarter. This assumes a tax rate of approximately 30 per cent.

For 2023, the company expects net revenue to be in the range of $9.549 billion to $9.584 billion, representing growth of 18 per cent. Diluted earnings per share are expected to be in the range of $11.77 to $11.85 for the year, and excluding certain inventory provisions, asset impairments, and restructuring costs recognized in relation to Lululemon Studio, and their related tax effects, adjusted diluted earnings per share are expected to be in the range of $12.34 to $12.42. This assumes a tax rate of approximately 29.5 per cent.