Pedestrians were seen passing by Canadian sportswear retailer Lululemon in Shanghai.
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Lululemon’s shares hit an all-time high on Thursday after the retailer exceeded Wall Street expectations in its last fiscal quarter and said it is on track to reach its 2023 revenue target much earlier than expected.
Shares of the sportswear maker rose more than 13 percent in early operations, reaching an intraday record high of $ 434.22. Shares had last reached an intraday high of $ 417.85 on August 30th. As of Wednesday, Lululemon had gained about 9% to date, bringing its market value to nearly $ 50 billion.
Famous for its women’s leggings and “ABC” men’s joggers, Lululemon’s sales have surpassed those of other retailers during the Covid pandemic. Consumers have been looking for comfortable garments to wear while working from home and when exercising. Buyers have spent more money on so-called leisure styles than dresses, suits and other formal attire.
But the company – and the fashion trend – will benefit even when consumers leave home and return to schools and offices.
For its current fiscal year, Lululemon expects revenues to range from $ 6.19 million to $ 6.26 million, meaning it will exceed a key financial target approximately two years ahead of schedule.
Chief Executive Calvin McDonald told analysts at a conference call on earrings that the retailer will also double its male business and quadruple its international segment earlier than expected. It plans to offer new long-term financial goals after the 2021 holidays.
McDonald added that Lululemon would run “even stronger” if it weren’t for the headache of the supply chain facing the retail industry today.
“Quarterly sales could probably have been even stronger if we hadn’t faced some of those outages,” the CEO said during an interview Thursday morning with CNBC’s “Squawk Box”.
Cowen & Co. raised its Lululemon stock price target to $ 520 from $ 476, setting a new high on Wall Street.
According to Cowen Retail analyst John Kernan, “management expressed significant confidence in the pace of its business and being in the early stages of its growth potential across product lines, activities, categories and regions.”
Following Lululemon’s optimistic quarterly results, Telsey Advisory Group also raised the target price of Lululemon shares to $ 485, from $ 460. According to FactSet, the average target price for Lululemon shares is now $ 434.20.
While supply chain disruptions, including higher air transportation costs and factory closures in southern Vietnam, continue to be headwinds, Lululemon has taken these factors into account in its upgrades, Dana Telsey said. , CEO and researcher at Telsey Advisory, in a note to clients.
“The pandemic has accelerated Lululemon’s strategic initiatives and the company seems well positioned to further seize opportunities in a post-pandemic world,” he said.
Lululemon, which also owns the Mirror connected fitness product, hopes to continue to drive growth by launching products in new fabrics, some of which are environmentally friendly. It continues to see higher gains in its men’s businesses and in key international markets such as China.
There have also been rumors that Lululemon will launch into footwear sometime next year, making it a closer competitor to Nike and Adidas.
“What has accelerated is the interest in wellness … for functional clothing. And that’s the sweet spot of the brand,” McDonald told CNBC.
Of course, the sportswear space is only more competitive. Levi Strauss & Co. has recently announced its plans to acquire yoga clothing maker Beyond Yoga. And Wolverine Worldwide, the company behind Merrell, Saucony, Sperry, Stride Rite and other shoe names, recently secured Lululemon’s rival brand, Sweaty Betty, for $ 410 million.
—CNBC Michael Bloom has contributed to this report.