Lululemon's Q3 net revenue up by 19% to reach $2.2 billion, with its Chinese market growing by 53%

On December 8, 2023, Lululemon released its results for the third quarter of fiscal year 2023. In the third quarter, the net revenue rose 19% year-on-year to $2.2 billion. Among this, the net operating income in China increased by 53% year on year and that of North America rose by 12% and that of international business advanced by 49%.

According to the financial report, Lululemon's adjusted gross margin for Q3 was $1.28 billion, accounting for 58.1% of net revenue, higher than Q3 2022's 55.9%. Comparable store sales grew by 9%, lower than the market expectation of 11.7%, while direct-to-consumer sales increased by 18%. Operating profit margin decreased by 370 basis points to 15.3%. During the third quarter, Lululemon opened 14 new stores, bringing the total number of stores to 686.

For Q4 of the 2023 fiscal year, Lululemon expects net revenue to be between $3.135 billion and $3.170 billion, a growth of approximately 13% to 14%. Earnings per share for the quarter are projected to be between $4.85 and $4.93. Compared to the strong demand in Q3, the outlook for the holiday season in Q4 is relatively tepid. As a result, the stock fell nearly 3%.

For the full 2023 fiscal year, Lululemon expects net revenue to be between $9.549 billion and $9.584 billion, an increase of about 18%. Diluted earnings per share for the fiscal year are projected to be between $11.77 and $11.85. Lululemon's CFO Meghan Frank stated, "In Q3, we exceeded expectations in both revenue and profitability. As we look ahead to the end of this fiscal year and the 2024 fiscal year, we will continue to focus on driving long-term growth."