Lululemon Athletica Inc. has posted weaker-than-expected first-quarter figures, proving that the powerhouse sportswear brand isn’t immune to coronavirus-related retail woes.
For the three months ended May 3, the Vancouver-based company logged profits of $28.6 million, or earnings of 22 cents per share, compared with the prior year’s EPS of 74 cents. Revenues fell 17% to $652 million — attributed to the temporary closures of its stores across the world due to the COVID-19 health crisis. Analysts had forecasted earnings of 23 cents per share and revenues of $688.48 million.
E-commerce, meanwhile, which accounted for 54% of total sales, amounted to $352 million. (In Q1 2019, digital made up 26.8% of total sales and was $209.8 million.) After market close, its stock was down more than 5% to about $292.
“We are learning more every day about our guests — how they enjoy interacting with us online and what makes them comfortable as stores reopen,” CEO Calvin McDonald said in a statement. “Our strong digital business demonstrates the strength of our guest connection and the long-term opportunity to create further omni-experiences going forward.”
Over the past couple years, Wall Street had been bullish on Lululemon’s performance in the athletic apparel sector: At the end of the 2019 fiscal year, the company posted better-than-anticipated earnings and sales — in addition to no long-term debt and a $400 million untapped revolver — despite early signs of the coronavirus’ impact on its business. Analysts had touted the brand’s ability to survive the broader economic fallout from the pandemic and perhaps even “emerge stronger when the crisis ends.”
On March 15, Lululemon became one of the first major nationwide retailers to shutter its stores and continue to pay workers across Europe and North America. At the time, all of its outposts in China — except for the location in Wuhan, where the virus originated in December — were open. Two months later, in May, the brand announced its reopening plan, which incorporates key learnings from China, where all locations are back in business. As of today, 295 of Lululemon’s 489 units are operational.
At the end of the quarter, Lululemon had cash and equivalents of $823 million and roughly $398 million under its revolving credit facility. It did not provide an outlook for the fiscal year due to uncertainties surrounding the outbreak.