Lululemon Athletica LULU.O reported current-quarter revenue and profit below Wall Street’s estimates on Thursday as shoppers curb spending on high-priced clothing and accessories due to decades of high inflation, sending its shares up 10%. send below.
High inflation, rising interest rates and the threat of a recession in the United States have resulted in a shift in consumer spending, affecting sales of apparel and sportswear as cash-strapped consumers focus on essentials.
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People are restricting themselves from splurging on higher-priced products, denting sales for companies like Lululemon, which is raising prices on its products to offset higher freight charges.
However, Lululemon raised its full-year revenue and profit forecasts and beat third-quarter revenue estimates.
The company forecast fourth-quarter revenue of between $2.61 billion and $2.66 billion, compared with analysts’ estimates of $2.65 billion, according to IBES data from Refinitiv.
Lululemon sees fourth-quarter profit between $4.20 and $4.30 per share, compared to analysts’ average estimates of $4.30 per share.
(Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by Maju Samuel)