(Reuters) – Lululemon Athletica Inc said on Monday the holiday shopping season was even better than it had expected and raised its profit and revenue forecasts for the fourth quarter, sending the Canadian yogawear maker’s shares to their highest since June 2013.
The company said in December its holiday season was off to a great start, with its highest traffic and largest sales ever on Black Friday and Cyber Monday.
Lululemon said it now expects fourth-quarter comparable sales to increase in the high single digits, on a constant dollar basis, compared with its previous forecast of a mid-single digit rise.
“We are thrilled with our performance this holiday season that reflects an accelerating trend across all parts of our business, and we look forward to continued momentum in 2018 and beyond,” Chief Executive Laurent Potdevin said.
The Vancouver-based company said its forecast for a stronger profit excluded the impact of the recent U.S. tax reform, but it expects to take a significant tax charge in the quarter related to the one-time deemed repatriation tax on foreign earnings.
Lululemon does not break down revenue by geography, but gets a significant amount of its sales from the United States.
The holiday-shopping quarter is critical for retailers and can account for up to 40 percent of their annual revenue. The National Retail Federation expects U.S. holiday sales of as much as $682 billion, nearly 4 percent higher than last year. (bit.ly/2xW7Oee)
Lululemon now expects net revenue of $905 million to $915 million for the quarter ending Jan. 28, implying year-over-year growth of 15-16 percent and higher than the forecast of $870 million to $885 million it gave on Dec. 6.
The company expects earnings of $1.24 to $1.26 per share, up from its previous forecast of $1.18 to $1.21. It raised its adjusted earnings forecast to between $1.25 and $1.27 per share.
Analysts on average were expecting an adjusted profit of $1.22 per share and revenue of $883.8 million, according to Thomson Reuters I/B/E/S.
Lululemon’s forecast was based on a 30.4 percent tax rate, and the company said it expects the new U.S. tax laws to be favorable to its effective tax rate in fiscal 2018.
The company’s shares rose 3.2 percent to a four-and-a-half year high of $81.92, before reversing course to trade down about 1.2 percent on Monday.
Lululemon will report fourth-quarter results on March 27.
Reporting by Nivedita Bhattacharjee; Editing by Savio D’Souza
Automated Trading Systems to trade news? Hire A Programmer!
We will be updating our subscribers as soon as we receive more news. For the latest updates sign up above!