Lululemon, A Breather on Earnings (LULU)

Lululemon Athletica Inc. (NASDAQ: LULU) may be taking a breather after earnings. The yoga-themed near-monopoly beat earnings but it looks as though the revenues may have been soft compared to what some investors might have been hoping for after it raised guidance on multiple occasions.  Earnings were $0.64 EPS versus the Thomson Reuters consensus of $0.57 EPS.  Revenues did rise by almost 53% to $245.4 million against estimates of $239.3 million.

For its first quarter, guidance was put at $0.36 to 0.38 EPS and revenues were put in a range of $175 to $180 million.  Thomson Reuters has estimates of $0.37 EPS and $180.56 million in revenues.

For its fiscal year, Lululemon sees earnings in a range of $1.90 to $2.00 EPS and $885 to $900 million in revenues.  Thomson Reuters has estimates of $1.88 EPS and $896.35 million in revenues.

One thing the company brought up was that sell-thru figures left the company with short term unmet demand and a low inventory position. It also noted a growing guest demand for its products that will allow it to accelerate the store and e-commerce growth.  Here is where the company is becoming a standout: it said something about being “the number one women’s athletic wear brand.”

The company did note cost pressures for this year ahead but its guidance reflects its outlook.  Lululemon shares closed at $79.35 yesterday against a 52-week range of $31.08 to $85.28, but shares are indicted down slightly by 1.75% at $77.95 in active pre-market trading.  This is just not enough of a drop for any downward dog jokes.

As a reminder, here was the most recent short interest data: the end of February was a reading of 6.59 million, and that has actually been in a state of decline.  That was actually the lowest short interest in the last year.

JON C. OGG