Categories Analysis, Consumer

LULU Stock: Lululemon Athletica enters new fiscal year all charged up

In the fourth quarter, adjusted earnings increased to $3.37 per share from $2.58 per share and came in above analysts’ forecast

Lululemon Athletica Inc. (NASDAQ: LULU) is one of the few retailers in the consumer discretionary segment that has remained unaffected by the macro headwinds so far. But the athletic apparel company’s market value contracted since hitting a peak last year and continued to downtrend during the recent stock selloff. The management is bullish on the long-term demand for athletic wear, thanks to the withdrawal of COIVD-19 restrictions and market reopening.

Buy LULU?

The company’s sales picked up at a steady pace and reached new highs after experiencing a slowdown in the early months of the pandemic, and beat estimates consistently since then. Since the positive momentum is likely to continue in the new fiscal year, the dip in valuation makes the stock an attractive investment. After hitting a near-one-year low, LULU is already on the recovery path.


Read management/analysts’ comments on quarterly results


It is widely expected that the stock would keep growing in the remainder of the year and go well past the $400-mark. The robust fourth-quarter results have added to the positive sentiment around the company.

Lululemon Athletica Quarterly Gross Profit Trend

In the fourth quarter of 2021, adjusted earnings increased to $3.37 per share from $2.58 per share in the corresponding period of the previous year and came in above analysts’ forecast. Driving the profit growth, revenues moved up 23% year-over-year to $2.1 billion, supported by a 22% increase in comparable-store sales, but fell short of expectations.

Bullish Outlook

Encouraged by the upbeat results, the management has forecast strong sales growth for fiscal 2022. Revenues are expected to grow between 20% and 22% to $7.490-$7.615 billion this year, which would translate into a sharp increase in adjusted earnings to $9.15-$9.35 per share. The projected numbers are above analysts’ consensus forecast.

Earlier this month, the board of directors of Lululemon approved a new stock repurchase program for up to $1.0 billion of the company’s shares. Meanwhile, the lingering uncertainty related to the pandemic remains a concern for the retail industry, though things have improved since being affected by the omicron variant.


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“2021 was another successful year for lululemon, which speaks to the enduring strength of our brand and our ability to deliver sustained growth across the business. We are proud that we passed the $6 billion in annual revenue milestone for the first time, and successfully achieved our Power of Three growth target ahead of schedule,” said Calvin McDonald, chief executive officer of Lululemon Athletica.

Shares of Lululemon closed the last trading session up 10% and made further gains in the after-hours, mainly reflecting the positive sentiment related to the strong fourth-quarter report. In the past twelve months, LULU has gained about 25%.

Looking for more insights on the earnings results? Click here to access the full transcripts of the latest earnings conference calls!

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