September 5, 2019 / 8:20 PM / 10 days ago

Lululemon raises full-year forecast on menswear, online strength

(Reuters) - Lululemon Athletica Inc (LULU.O) reported better-than-expected second-quarter revenue and profit on Thursday, buoyed by strength in its online and menswear businesses, helping the Canadian athletic apparel maker to raise its forecasts for the year.

FILE PHOTO: Clothes are displayed in a Lululemon Athletica retail store in New York, U.S., March 30, 2017. REUTERS/Brendan McDermid/File Photo

Lululemon has been focusing on ramping up its online presence, expanding internationally and growing its store counts. The company’s direct-to-consumer revenue, which includes its online and mobile sales, increased 30% in the second quarter.

The company, known for its trendy women’s sports apparel, has also been aiming for a larger slice of the men’s wear segment, where comparable sales grew 27% in the quarter ended Aug. 4.

The growth in the men’s business was higher than the company’s total comparable sales growth of 15%, which beat analysts’ expectation of an increase of 12.2%.

The yoga pants specialist said it now expects full-year net revenue of between $3.80 billion and $3.84 billion, compared with its previous forecast of $3.73 billion to $3.77 billion.

The company boosted its full-year profit forecast range to $4.63 to $4.70 per share, from $4.51 to $4.58 per share.

Shares of the company rose about 3% in extended trading.

Lululemon said it has seen an increase in momentum in Europe and Asia Pacific, especially in China.

The company, however, said it continues to expect a 4 to 5 cents of negative impact within gross margin related to the new U.S.-China tariffs and incremental air freight costs.

On a post-earnings call, Chief Financial Officer Patrick Guido said Lululemon’s exposure to China is relatively small, with about 6% of finished goods in scope for U.S. tariffs.

“So going forward, we do not expect it to be a big impact to the business,” he said.

The company said it remained optimistic about the fall season and beyond.

Lululemon’s revenue rose 22% to $883.4 million in the quarter ended Aug. 4, beating the average analyst estimate of $845.7 million.

Excluding items, Lululemon earned 96 cents per share, beating analysts’ estimates of 89 cents.

Shares of the company have gained 54.5% this year, outperforming the S&P 500 index's .SPX 18.8% rise.

Reporting by Arundhati Sarkar in Bengaluru; Editing by Maju Samuel

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