Lululemon (ticker: LULU) said late Tuesday it earned $330 million, or $2.52 a share. On an adjusted basis, excluding one-time items, earnings per share were $2.58. Revenue rose 24% year over year to $1.7 billion, while analysts were looking for EPS of $2.49 and revenue of $1.66 billion.
Same-store sales rose 21% in the quarter, ahead of the 14% consensus estimate, as digital sales offset continuing declines at bricks-and-mortar stores. Direct-to- consumer sales accounted for more than half of revenue in the period, up from a third in 2019.
For the full year, Lululemon said it expects to earn between $6.10 and $6.25 a share, with revenue of $5.55 billion to $5.65 billion. Analysts are looking for EPS of $6.44 and revenue of $5.68 billion, according to FactSet.
Lululemon was down 2.2% to $310 in early trading. The shares were off nearly 9% year to date, compared with a 72.8% rise in the past 12 months.
The Covid-19 pandemic kept many people at home—and motivated to stay healthy—so Lululemon and other athletic-gear makers enjoyed a strong 2020. Now, like other pandemic winners, they face questions about whether the momentum will last.
The disappointing forecast for the full year stems in part from strategic reinvestments in the business, including its booming digital channel and Mirror, the at-home fitness brand. Still, it likely wasn’t what bulls were hoping to hear as they look ahead to a reopening economy later this year.
A few analysts lowered their targets for the stock price, but without changing their ratings.
B. Riley’s Susan Anderson maintained a Buy rating on Lululemon while cutting her target to $374 from $409. “We continue to believe Lululemon will be able to grow their core business both domestically and internationally through store expansion and expected demand for technical apparel,” she wrote in a research note.
Barclay’s Adrienne Yih reiterated an Overweight rating but lowered her target to $401 from $410, writing that “a strong slate of innovation for fiscal 2021, a growing men’s business, continued international growth, coupled with connected fitness and an FY22 launch into footwear keep the growth engine rolling.”
kept a Buy rating on the shares, while taking his target down to $390 from $396. He said that “while elevated investments may limit stock appreciation in the near-term, we believe over the long-term, Lululemon’s unique growth profile will drive a higher share price.”
Piper Sandler’s Erinn Murphy maintained an Overweight rating while lowering her target to $465 from $478. “We are encouraged that the core lululemon profitability continues to improve from 2019 levels–consistent with the long-term plan,” she said.
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