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Lululemon Athletica boosts outlook sending shares higher

Lululemon shares jumped after the activewear company raised its sales and profit forecasts on strong demand for comfortable athletic clothing.

Lululemon Athletica raised its forecast for annual sales and profit on the strength of sales for its pricey activewear.

Shares gained 13% in extended trading.

Contributing to better-than-expected quarterly results were an easing of air freight costs and tighter inventory control as well as a strong rebound in China.

The move toward more comfortable clothing and activewear since the pandemic has taken hold with most Americans, especially among a higher-income customer base.

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"We've seen no change in our (customer) behavior in terms of frequency of purchase or engagement," said Lululemon CEO Calvin McDonald on a post-earnings call.

Lululemon saw inventories rise a smaller-than-expected 24%. The company expects growth of about 20% at the end of the current quarter.

Revenue from China rose 79% helped by the easing of that country's strict COVID-19 curbs.

North America sales jumped 17%.

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Net revenue increased 24% to $2 billion, beating estimates of $1.93 billion, according to Refinitiv IBES.

Lululemon now expects full-year 2023 revenue between $9.44 billion and $9.51 billion, compared with $9.30 billion to $9.41 billion projected earlier.

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It forecastS annual profit between $11.74 and $11.94 per share, up from $11.50 to $11.72 earlier.

Reuters contributed to this report.

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