FINANCE

Lululemon Q3 earnings, sales beat Street; testing paid membership program

BY Marianne Wilson

Lululemon Athletica Inc. reported earnings and sales that beat expectations amid ongoing growth in its men’s division, but offered a fourth-quarter outlook that was disappointing to investors.

On its quarterly earnings call with investors, the athleisure retailer said it has been testing a loyalty program in Edmonton (Canada) that charges members $128 a year for access to special events and classes, free expedited shipping and other benefits. The program has been so successful that it plans to expand the test to other markets.

“Guests are seeing value beyond just the product,” Lululemon CEO Calvin McDonald said on the call.

The company’s net income rose to $94.4 million, or $0.71 a share, for the quarter ended Oct. 28, compared to $58. 9 million, or $0.43 a share, in year-ago period. Adjusted diluted earnings per share were $0.75, up from $0.56 last year. Analysts had expected adjusted earnings of $0.70 a share.

Net revenue increased 21% to a better-than-expected $748 million amid strong sales of men’s and women’s outerwear. Lululemon’s expansion into men’s clothing is paying off, with the category recording the highest increases overall. Total same-store sales rose 17%.

The company also increased its guidance for full-year profits, and met analysts’ expectations for its fourth-quarter forecast.

“Lululemon has achieved a high level of success over the past year and has established a solid foundation to continue to build our future. It’s been exciting to see guests around the world respond so strongly to our product offerings and improved digital experience.

For the fourth quarter, the retailer estimated revenue of as much as $1.13 billion with earnings of $1.64 cents per share, slightly below what analysts were expecting.

“Lululemon has achieved a high level of success over the past year and has established a solid foundation to continue to build our future,” said McDonald.

The company ended the quarter with 426 stores.

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Neiman Marcus racks up fifth straight quarter of same-store sales gains

BY Marianne Wilson

Neiman Marcus Group LTD reported a wider third quarter loss as its debt continues to take a toll on the company’s earnings.

The luxury retailer reported a net loss of $28.2 million for the quarter ended Oct. 27, compared with a net loss of $26.2 million in the year-ago period. Interest expense to manage the firm’s heavy debt were significant, totaling $80.5 million in the quarter. Adjusted earnings before interest, taxes, depreciation and amortization rose to $135.3 million from $122.3 million.

Total revenues inched down to $1.093 billion from $1.096 billion. Same-store sales rose 2.8%

“Our first quarter results, marking our fifth consecutive quarter of comparable revenue increases, demonstrate the ongoing stabilization of our business,” said Geoffroy van Raemdonck, CEO, Neiman Marcus Group. “We continue to focus on delivering on our plan this year, while also positioning the company for future growth. We will continue to drive innovation that enriches the shopping experience, including investing in personalization and omni-selling.”

Neiman Marcus is burdened with $4.6 billion in debt (related to two leveraged buyouts), almost all of which comes due in 2020 and 2021. The retailer has been in discussions since late fall with groups of creditors about various options, including one that would it give it more time to pay back its loan. In late November, the retailer and its lenders ended their debt negotiations — at least for the time being. Neiman Marcus still has time to try and get the debt extended, MarketWatch reported.

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Debit cards most popular option for holiday shopping

BY Marianne Wilson

Despite the potential to earn rewards when shopping with a credit card, most Americans plan to shop with a debit card this holiday season.

That’s according to TD Bank’s “Holiday Retail Report,” which found that 36% Americans will use debit card to pay for holiday purchases, followed by a credit card (34%), check (17%), store-branded credit card (7%) and in-store financing options (4%).

Those who plan to finance all or some of their holiday shopping will do so with a bank-offered credit card (71%), a store credit card (57%) or a store-backed payment plan (39%), TD Bank found. And 96% who financed holiday shopping in the past paid it off within a year, including 33% who paid it off immediately and 24% who paid it off within the first month after making a purchase.

In other survey findings:

• Respondents were most likely to pursue financing for their holiday shopping if doing so offered them significant savings (61%).

• Millennials are more likely than Gen-X to stay loyal to the brands they favor year round during holiday time (45% vs. 21%, respectively). The two most important features when deciding where to shop were variety of products (46%), discounts offered (41%).

• The trends most likely to pique shoppers’ interests are customized coupons (37%), discounts via geotargeting (35%) and enhanced shopping atmospheres (22%).

• Thirty-nine percent of shoppers have purchased an item from social media advertising.

“Our data shows that holiday shoppers have financed responsibly in the past, which has led retailers to offer increasingly innovative financing options that provide consumers with an enticing combination of savings and rewards on their holiday purchases,” said Matt Boss, head of credit cards and unsecured lending at TD Bank. “It’s a win-win from the customer point of view. Rewards programs enhance a customer’s overall experience and increase their likelihood to shop at a retailer again and again, long after the holiday shopping season has ended.”

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