Lululemon (LULU) Reports Sales Rose 88%, Analysts Hike Numbers to Reflect Raised Guidance

June 4, 2021 8:38 AM EDT
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Price: $427.59 +2.06%

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    29 Buy, 15 Hold, 1 Sell

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Shares of Lululemon (NASDAQ: LULU) are up 0.6% in early Friday trading after the company reported Q1 numbers that topped analysts’ expectations.

The company said its earnings per share (EPS) came in at $1.16 per share to easily top the $0.91 per share expected from market analysts. Sales for the quarter rose 88% to come in at $1.23 billion, again higher than the $1.13 billion expected.

"Our first quarter results reflected strength across all drivers of growth, fueled by the continued expansion in our e-commerce business and a rebound in brick and mortar stores. Our strong performance across categories, channels and geographies demonstrates the momentum and strength of lululemon as we shift into the new normal. All of us on the leadership team are grateful to our teams around the world who enabled these results, and who continue to focus on realizing growth,” Calvin McDonald, Chief Executive Officer, commented.

For the current quarter, LULU is calling for EPS between $1.10 per share and $1.15 per share on revenue between $1.3 billion and $1.33 billion. The raised guidance came in higher than the expects EPS of $1.01 per share on sales of $1.20 billion.

On a full-year basis, LULU is expecting EPS between $6.73 to $6.86 per share on sales of $5.83 billion to $5.91 billion to easily exceed the expected $6.48 per share on sales of $5.68 billion.

“We were performing well before the pandemic, I think we led the peer group during the pandemic, and we’re excited about ... our ability to continue to perform post-pandemic,” McDonald added.

Cowen analyst John Kernan says the raised guidance shows increasing confidence on the side of management as he reiterated an “Outperform” rating and raised the price target to $405.00 per share from $392.00 per share.

“Management's guidance shows increasing confidence in the sales recovery in stores and ability to lap e-commerce gains in FY20 as the business generates some of the best two-year CAGRs in global softlines retail. We are raising our FY21 and FY22 sales and EPS estimates further above consensus. Management seems confident in offsetting freight and input cost inflation,” Kernan said in a note.

Similarly, BTIG analyst Camilo Lyon says a Q1 beat reflects broad-based strength and he as well moved the price target slightly higher to $440.00 per share from $434.00 per share.

“Demand for LULU gear is solid and growing across genders, categories, and geographies. Also traffic to stores is returning, thus helping store productivity rates climb back to F19 levels (88% of F19 store productivity in FQ1) which we believe could happen in the back half of the year,” Lyon wrote in a note.

He especially highlighted the men’s business performance, which showed “signs of renewed traction.”

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