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Athletic apparel company Lululemon Athletica, best known for it's yoga gear reported better than expected first quarter earnings and raised guidance sending $LULU to an all time high. High margin, accelerating and expanding in new lines and online sales boost.

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

$0.74 Beat $0.70 EPS And $782M Beat $755 Million forecast in revenue. 

Earnings

LULU reported first quarter earnings of net income rising to $96.6 million, or 74 cents a share, from $75.2 million, or 55 cents a share vs. 70 cents per share, expected and revenue of $782 million, vs. $755 million, expected.

Same-store sales grew 14%, beating a Refinitiv consensus estimate for 11.6% growth.

Lululemon Athletica Inc NASDAQ: LULU 

Market Reaction - After Hours 180.01 +9.12 (5.34%)

Highlights

  • Comparable store sales increased 6%, or increased 8% on a constant dollar basis.
  • Direct to consumer net revenue increased 33%, or increased 35% on a constant dollar basis.
  • Direct to consumer net revenue represented 26.8% of total net revenue compared to 24.3% for the first quarter of fiscal 2018.
  • Gross profit was $421.7 million, an increase of 22% compared to the first quarter of fiscal 2018.
  • Gross margin was 53.9%, an increase of 80 basis points compared to the first quarter of fiscal 2018.
  • Income from operations was $128.8 million, an increase of 23% compared to the first quarter of fiscal 2018.
  • Operating margin was 16.5%, an increase of 40 basis points compared to the first quarter of fiscal 2018.
  • Income tax expense was $34.6 million compared to $32.1 million in the first quarter of fiscal 2018 and the effective tax rate was 26.4% compared to 29.9%.
  • Diluted earnings per share were $0.74 compared to $0.55 in the first quarter of fiscal 2018.

Lululemon reports first quarter 2019 earnings results

Outlook

The companyraised its full-year guidance. It expects revenue between $3.73 billion and $3.77 billion, and earnings per share between $4.51 and $4.58 in 2019.

CFO Patrick Guido said that Lululemon’s second-quarter forecast, which was lower than analyst estimates, reflects a “modest impact” from potential new tariffs, as well as additional costs to airfreight products in order to avoid anticipated port congestion in Asia due to pending tariff increases.

Most of the impact from tariffs will occur in the latter half of the year, mostly in the third quarter, Guido said. He expects these additional costs to trim earnings per share by about 5 cents in 2019.

“Lululemon continues to see strong momentum across the entire business,” wrote Chief Executive Officer Calvin McDonald. He added that Lululemon was optimistic about future opportunities and delivering on its five-year growth plan, which aims to double men’s and digital revenues, and to quadruple international revenues.

Source: Lululemon Athletica

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