Nothing bitter about LululemonFinally, a retailer with positive earnings this quarter. Was that so much to ask for?
- LULU finished up over 6% in extended trading after reporting earnings that topped estimates. The athletic apparel retailer reported EPS of $1.48 on revenues that grew over 30% to $1.61bn. And while share prices are still down 20%+ YTD, the stock has recovered 12% in the last two weeks.
- In a time of high inflation, people want yoga pants so they can go to their classes and zen out from the macroeconomic dread. Indeed, online and store sales are up 28% YoY, with analysts originally only predicting a 20% increase.
- Lululemon now has a spring in its step, with the company upping its expectations for revenue to as much as $7.71bn from what was before $7.62bn at the top end. Take note, retailers – positive earnings are possible in a bear market too.
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Lulu flexes its musclesLululemon is battling the same supply-chain challenges as everyone else, but investors seem to think it wears them slightly better than most.
🔍 Key points:
- The apparel maker leaped 7.7% in extended trading on Tuesday after releasing a mixed Q4 lineup. The brand reported EPS of $3.37, which beat estimates for $3.25, but revenue of $2.1bn came in under forecasts despite growth of 23%.
- It’s one of the few direct-to-consumer brands that’s seen revenue growth this quarter as the industry faced supply snags and Omicron. It has continued demand for the athleisure trend that lockdown started to thank, seeing store sales jump 22% and sales benefitting from modest price hikes.
- Lulu has a habit of pleasantly surprising investors with its earnings, and this is its third consecutive quarter beating earnings estimates. Apparently the winning streak is set to continue, with Lulu forecasting FY2022 revenue of up to $7.6bn when analysts expected $7.3bn.
Pumped up kicksLadies everywhere can now live out their dream of leaving the house dressed head to toe in Lululemon.
🔍 Key points:
- The brand has released a brand new shoe line called Blissfeel, marking its first foray into footwear in its 24 year history after the company noticed a gap in the market for female-specific running shoes.
- The move pits Lulu against legacy brands like Nike and Adidas, who currently dominate the running shoe market, which grew 20% in 2021 – competition is heavy though, and Lulu hopes being the first major company with a female focus will help it stand out.
- It needs to diversify its business to keep up with its pandemic-induced boom in sales, which came as the world found leggings were more comfy than jeans no matter where you were going. Women accounted for 69% of Lulu sales in 2020, so this is a good place to start, but it also has plans for a men’s line next year.
Lulu gets the lemon squeezed out of itNike (NKE) hands Lululemon a very sour lawsuit and investors are desperately looking for some sugar to sweeten the deal.
- Prices tumbled down 4.82% on Wednesday, cinching a five session losing streak to hit a six month low.
- Nike (NKE) has sued the athleisure company for patent infringement. It claims that Lulu’s at-home Mirror fitness device, which it bought for $500m in 2020 during the pandemic-induced at-home fitness fad, is too similar to its own running app tech.
- Lululemon is no stranger to a legal battle. Last month it escalated its fight with Peloton (PTON) and accused the brand of copying its leggings and sports bras designs.
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Lulu licks its woundsLululemon saw its shares dip after hours despite flexing impressive Q3 muscles.
- It bested expectations on both ends. EPS of $1.62 was up 40% y-o-y and beat expectations of $1.41. Revenue was up 30% to $1.45bn, topping the $1.41bn analysts predicted.
- In-store shopping made a comeback. Retail store sales rose 32%, while online shopping tapered off with direct-to-consumer sales lifting just 23%.
- People got a jump on their Xmas shopping (athleisure is all the rage this season don’t you know), which apparently pulled forward Q3 earnings. That means less shopping for the current quarter though.
- Guidance was lighter than hoped. Its midpoint revenue forecast of $2.15bn lost to expectations of $2.17bn.
- Last year's $500m Mirror acquisition is bringing down the team. It cut the in-home fitness firm's sales forecast from $275m to $130m.
- The effects of Covid aren’t over. Supply chain issues are still plaguing Lululemon and left some categories without inventory for the holiday season. A new strain means another hit to production.
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