Lululemon (LULU  ) shares were 10% higher following the company's Q4 and 2021 full-year earnings reports. The company exceeded analysts' consensus expectations on the top and bottom line and also issued 2022 guidance which was slightly better than expected.

The company continues to face a tough operating environment with higher costs, supply chain issues, and concerns that inflation could erode consumer spending. Lululemon's recent report does show that its growth trajectory remains intact. It's also seeing significant growth in men's apparel as well as launching its own line of footwear. However, its venture into exercise equipment with its acquisition of Mirror seems destined for failure as growth in this category has disappointed.

Inside the Numbers

In Q4, Lululemon reported $3.36 in earnings per share which beat estimates of $3.28 per share. This was a 33% increase from last year's Q4 earnings. Revenue increased by 23% in the quarter. For the full year, the company had 40% revenue growth, reaching $6.3 billion which was $1 billion above its forecast in Q1 of last year.

The company noted solid demand across all its categories as there was no drop-off in terms of exercise or athleisure apparel. Sales of these items spiked during the pandemic for obvious reasons, and many were predicting some sort of reversion to the mean as the economy reopened.

This isn't the case, and one reason is that offices are very slow to reopen with only about 35% of attendance estimated. And most companies are now more open to hybrid or remote work arrangements.

The company also issued solid guidance for 2022 as it sees another year of double-digit sales growth with guidance of $7.8 billion. The company did experience some margin compression, however, it's much less than other companies, and they remain quite healthy at 58%. For 2022, Lululemon sees gross margins expanding to 60%.

Lululemon shares declined by nearly 40% from their all-time high in November of last year to mid-March. Since then, shares have risen about 30% and remain off from all-time highs by 22%. Following the recent rally, shares are now positive YTD.

Lululemon remains expensive with a forward P/E of 35. However, it's clear that its growth trajectory is far from finished, and it maintains pricing power as evidenced by its very healthy margins.