April 21, 2021

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LULU Stock Falls As Lululemon Earnings Beat But 2021 Outlook Mixed

2 min read

Workout apparel maker Lululemon (LULU) topped fourth-quarter estimates but gave mixed full-year guidance late Tuesday. LULU stock fell.



Lululemon Earnings

Estimates: Analysts expect EPS of $2.49, 9% above the year-ago quarter, on revenue of $1.66 billion, a 19% increase from last year, according to Zacks Investment Research.

Comparable sales are seen rising 10.1%, or 11.4% on a constant currency basis, according to Consensus Metrix.

Results: EPS of $2.58 on revenue of $1.73 billion, as direct-to-consumer net revenue soared 94%. Comparable sales increased 21%, or 20% on a constant dollar basis. But adjusted operating margin decreased 290 basis points to 26.9%.

Outlook: Q1 EPS of 86-90 cents, above consensus for 84 cents, on revenue of $1.1 billion-$1.13 billion, above consensus for $1.01 billion. Full-year EPS of $6.30-$6.45, below consensus for $6.65, on revenue of $5.55 billion-$5.65 billion, above views for $5.41 billion.

Lululemon operates and franchises nearly 500 stores in the U.S., Canada, Australia, the U.K. and New Zealand. Like most retailers during the pandemic, it has relied heavily on digital sales to shore up lost revenue due to store closures. Online sales increased 94% to 43% of total revenue in the last quarter. 

Also last quarter, Lululemon began selling the $1,500 Mirror at-home exercise equipment maker in 18 stores and on its website. It bought the startup for $500 million in 2020.

The Mirror competes with Peloton (PTON)’s interactive exercise bikes, as well as Apple’s (AAPL) Fitness+ app. Nike (NKE) has also been expanding in at-home fitness while its apparel competes with Lululemon’s.

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LULU Stock

Shares dropped 0.2% late after closing up 0.3% at 317.09 on the stock market today. LULU stock has a buy point of 387.47 from a long consolidation, according to MarketSmith chart analysis.

Lululemon’s relative strength line is trending upward. The stock has a solid EPS Rating of 86, as it tries to build on a return to profitability in Q3 after two straight quarters of losses.

As the economy reopens, retailers like Lululemon face supply-chain issues related to port congestion and container shortages. Shipping congestion caused by the blockage at the Suez Canal last week may also cause ripples among suppliers.

Nike reported reported mixed fiscal third-quarter results earlier this month. North America revenue declined 10% to $3.56 billion due to supply chain challenges, including global container shortages and U.S. port congestion.

Meanwhile, Peloton could also be an emerging competitor in apparel as it recently partnered with German athletic-gear giant Adidas (ADDYY).

Please follow Adelia Cellini Linecker on Twitter @IBD_Adelia.


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2021-03-30 16:35:18

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