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Athletic apparel company Lululemon Athletica, best known for it's yoga gear reported better than expected fourth quarter earnings sending the stock to all time highs, up over 10%. $LULU business is high margin, accelerating and expanding in new lines, online sales and in China. 

Lululemon Pose

$LULU has successfully crafted out a niche for itself as a North American sports apparel brand in a very crowded marketplace, Nike remains the dominant player in the athletic apparel space with Adidas popular with teens and millennials.

Lululemon Athletica Inc NASDAQ: LULU · Reported Earnings After Close Wednesday

 $1.85 Beat $1.74 EPS And $1.17 Billion Beat $1.15 Billion forecast in revenue. 

Earnings 

LULU reported fourth quarter earnings per share of $1.85 per share, vs. $1.74 per share expected and revenue of $1.17 billion vs. $1.15 billion. Strong sales during the holiday quarter helped the company reach its goal of exceeding $1 billion earlier than expected.

In the quarter ended Feb. 3, Lululemon said net income rose to $218.5 million, or $1.65 per share, from $119.8 million, or 88 cents per share. Same store sales rose 16 percen in line with estimates.

Lululemon Athletica Comp Sales Trend

 

Lululemon Athletica Inc NASDAQ: LULU 

Market Reaction - After Hours $165.22 +18.42 (+12.55%)

 Highlights

  • Lululemon’s operating margin was 21.5 percent, another goal it reached two years ahead of schedule.
  • Sales at stores open at least 12 months rose 16 percent, in line with estimates.
  • After adjusting for currency fluctuations, same-store sales were up 17 percent.
  • Both measures exclude revenue from the last week of fiscal 2018. 
  • CEO McDonald said Lululemon’s expansion into men’s apparel is the retailer’s largest, most exciting segment for future growth, at just over 20 percent penetration today.
  • Specifically, the men’s “bottoms” segment has been extremely profitable.
  • “We really believe that Lululemon can be a duel gender brand and that our men’s business can ultimately be as big as our women’s,” said Haselden.
  • Lululemon’s profitability in Asia and Australia more than offset the operating loss in Europe.
  • Now with 21 stores in Europe, the retailer said it was about a year and half away from breaking even in Europe.
  • Seasonal stores have also proved successful for the company. Chief Financial Officer Patrick Guido said they are a low-risk way to build the brand and gage the market

Outlook

In fiscal 2019, the company expects to report earnings of between $4.48 and $4.55 per share, ahead of analyst estimates of $4.40 per share. Lululemon expects revenue in the range of $3.70 billion to $3.74 billion, higher than the forecast of $3.27 billion.

For the first quarter, Lululemon expects to see revenue between $740 million and $750 million, in line with estimates of $743 million. The company sees earnings per share between 68 cents and 70 cents, slightly higher than the 67-cent expectation. The retailer also announced a $500 million stock repurchase program. 

Source: Lululemon Athletica

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