Lululemon Athletica
Overall, LULU's performance over the past year has been in-line with other exercise apparel makers. They've benefitted from the unique conditions of the pandemic which saw an increase in exercise and leisure clothes while other categories saw a steep plummet.
Sales were negatively affected by store closures and decreased foot traffic, but it was able to offset this with increased online sales. The growth in its digital channel could end up being a long-term benefit for the company as these sales have a higher chance of becoming recurring and also come with higher margins.
Inside the Numbers
In Q4, Lululemon reported $2.58 in earnings per share and revenue of $1.73 billion. Direct to consumer sales were a standout performer with 94% growth. Comparable sales were 21% higher, although decreased to 26.9% from 29.8%. Analysts were looking for $2.49 in EPS and revenue of $1.66 billion.
The company issued guidance for Q1 of EPS between $0.86 and $0.90 which topped expectations of $0.84. Revenue for Q1 also came in above expectations at $1.1 billion vs $1.01 billion. However, the company fell short in terms of full-year EPS at between $6.30 and $6.45, while analysts were looking for $6.65. Revenue was slightly above analysts' forecasts at $5.6 billion vs $5.4 billion.
Q4 also marked the introduction of its $1,500 Mirror at-home exercise display which it currently sells in 18 stores and on its website. Last year, it bought Mirror for $500 million in an effort to compete with Peloton
Lululemon also noted some supply-chain issues due to congestion at ports and container shortages. Its major competitors like Nike
Stock Price Outlook
Lululemon seems to be trading similarly to many of the stocks that benefited from the coronavirus. From March to September, the stock was up more than 150%. Since then, it's had a mild correction and is down about 25%.
However, this seems to be setting up a nice buying opportunity as the company's underlying momentum is intact. The correction also has led to much more attractive valuations. Currently, Lululemon has a forward PE of 39 which is reasonable considering its 26% sales growth and 11% earnings growth.