Lululemon, Abercrombie lift holiday quarter targets on robust demand

By Granth Vanaik and Juveria Tabassum

(Reuters) -Lululemon and Abercrombie & Fitch raised their holiday quarter forecasts on Monday, signaling strong demand during the key sales period even as shopping budgets remained constrained.

The upbeat forecasts follow a mixed holiday season for the sector, according to estimates from Adobe Analytics and Mastercard, as retailers competed to attract customers with steep discounts.

However, focus on fresher styles and limited inventory overhang helped Abercrombie and Lululemon sell more products at full prices as well.

Lululemon last month had forecast tepid holiday quarter results, but said on Monday that it was pleased with its performance during the period.

“Our sales trend remains balanced across channels, categories and geographies, enabling us to raise our guidance,” CFO Meghan Frank said in a statement.

Lululemon now expects fourth-quarter revenue to be between $3.17 billion and $3.19 billion, slightly above prior expectations. It projected profit per share to be in the range of $4.96 to $5.00, compared with prior forecast of $4.85 to $4.93.

Abercrombie forecast fourth-quarter net sales to rise in the high teens percentage range, compared with its previous forecast of up low double-digits.

The women’s business was expected to achieve its highest-ever holiday quarter sales, CEO Fran Horowitz said in a statement.

Abercrombie shares, which had tripled in 2023, were up 5%, while Lululemon slipped about 1%. The yogawear maker’s shares had gained nearly 60% last year.

“Most of these companies put out pretty conservative guidance… so I’m not that surprised that we might see some upward revisions,” Morningstar analyst David Swartz said.

Shares of footwear-maker Crocs jumped nearly 14% as it forecast a surprise rise in fourth-quarter sales, while American Eagle Outfitters was up 5% after raising its holiday-quarter revenue forecast.

Crocs, which struggled with inventory destocking at wholesalers last year, said its namesake brand had gained market share.

(Reporting by Granth Vanaik and Juveria Tabassum in Bengaluru; Editing by Shilpi Majumdar and Sriraj Kalluvila)