Lululemon Athletica drops 3% after failing to raise guidance despite earnings beat

December 7, 2023 4:24 PM EST
Get Alerts LULU Hot Sheet
Price: $467.84 -0.09%

Rating Summary:
    32 Buy, 11 Hold, 3 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 12 | Down: 19 | New: 23
Join SI Premium – FREE
(Updated - December 8, 2023 5:46 AM EST) -- Lululemon Athletica reported fiscal third-quarter results that topped Wall Street estimates, but the athletic apparel maker's revenue guidance for the holiday season quarter fell short of estimates.

Lululemon Athletica Inc (NASDAQ: LULU) fell more than 2.5% in pre-market Friday following the results.

The company reported adjusted EPS of $2.53 on revenue of $2.2 billion. Analysts polled by anticipated EPS of $2.28 on revenue of $2.19B.

Comparable sales increased 13%, with direct-to-consumer net revenue up 18%. Gross margin increased 110 basis points to 57%.

For Q2, the company sees diluted EPS in the range of $4.85 to $4.93, in-line with estimates of $4.93 per share and revenue in the range of $3.14B to $3.17B, missing estimates of $3.18B.

On Nov. 29, the company approved an additional stock buyback program for up to $1B.

Oppenheimer analyst Brian Nagel said the results suggest the company is "resilient amid macro pressures."

"Looking closer into 2024, we are now even more upbeat upon nearer-term fundamental prospects for LULU, particularly as macro pressures continue to abate, and the likelihood of investors to award shares a higher multiple, more reflective of the company’s superior fundamental prowess," he said.

Lululemon is a Top Pick within Oppenheimer's Consumer Growth & eCommerce research coverage.

Bernstein analyst Aneesha Sherman said investors are likely disappointed that LULU didn't raise FY guidance after the Q3 beat.

While Sherman remains Market Perform-rated on LULU stock "given the run-up in valuation since October," she lifted the price target by $34 to $400 per share to reflect the recent S&P500 index inclusion.

Additional reporting by Senad Karaahmetovic

You May Also Be Interested In

Related Categories

Analyst Comments, Analyst PT Change, Earnings, Guidance, Hot Guidance, Hot List, Investing

Related Entities

Sanford C. Bernstein, Standard & Poor's, Earnings, Senad Karaahmetovic