EPS of $5.29 beat estimates of $5.03; Revenue of $3.2B matched estimates. But it lowered guidance, citing 'slowing US trends in a challenging environment'. Lululemon's 2024 guidance could prove conservative, given 2023's above-consensus results. Still, weaker consumer spending in the US is a concern and led to a slower start to 1Q. Trends may improve throughout the year as the retailer works to strengthen its assortment through more smaller sizes for women and color offerings. Opportunity remains to gain market share abroad, with international sales up 54% in 4Q and mainland China 78%, as it continues to be ahead on its "Power of Three x2" goals. Total revenue rose 16% in the quarter, led by strength abroad and digital sales, which gained 17% with the help of its more than 17 million loyalty members. In 2024, sales could gain 11-12% (10-11% excluding the 53rd week), with gross margin unchanged vs. 2023 while 1Q sales may see a 9-10% increase. We would be a 'slow' buyer, accumulating on further weakness. It is a very solid company simply experience a bit of a consumer slowdown.
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