Lululemon Athletica Inc. on Thursday raised its annual profit and revenue forecasts as demand from affluent customers for its new belt bags, golf and tennis clothing cushions the blow from a cut in spending by lower-income households.

Shares in Lululemon, which also posted upbeat second-quarter results, rose nearly 8 percent in extended trading.

Higher-income households have largely shrugged off the impact of steeper prices of everyday essentials to splurge on discretionary goods including apparel and bags, buoyed by their savings during the lockdowns.

Lululemon has tapped into its loyal customers by entering categories including footwear and expanding its men’s line to sustain its athleisure-led pandemic sales momentum, outperforming peers Athleta and Sweaty Betty in 2022 so far.

Analysts have also said discounts at Lululemon, which has a relatively fresh stock, have risen only marginally in recent weeks while other apparel retailers have had to cut prices sharply to offload out-of-style inventory.

Boosted by a strong second quarter, Lululemon raised its net revenue forecast for 2022 to between $7.87 billion and $7.94 billion from $7.61 billion to $7.71 billion.

The company forecast 2022 adjusted earnings per share between $9.75 and $9.90, compared with its previous outlook of $9.35 to $9.50.

Wall Street analysts expect annual earnings of $9.44 per share on net revenue of $7.69 billion, according to IBES data from Refinitiv.

The company’s second-quarter net revenue rose 29 percent to $1.87 billion, beating estimates of $1.77 billion.

Net income for the quarter rose to $289.5 million, or $2.26 per share, from $208.1 million, or $1.59 per share, a year earlier.

By Praveen Paramasivamu; Editing by Vinay Dwivedi

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