Lululemon Athletica (NASDAQ: LULU)
Tuesday morning athletic appeal maker Lululemon raised its full year outlook and reported on its first quarter earnings. Lululemon reported profits of 33 cents a share, beating by a penny leading to a $47.8 million, or 10 percent raise in revenue to $423.5 million. These numbers were better than expected beating on the top and bottom line of results. The company has reported better than expected profits for the last eight quarters in a row. The Only short fall comes from in store sales which have declined a percent. Web sales, which generate 19.7 percent of total revenue, were there to make up for this difference and grew 6 percent.
Laurent Potdevin, lululemon’s CEO, stated: “Our team’s solid performance resulted in another improving quarter – coming in ahead of our revenue expectations. We drove positive trends in traffic, conversion, and brand engagement, along with a continued acceleration of our e-commerce business.” Mr. Potdevin continued: “To support our long term goals, we are intentionally striking a strategic balance between strong growth and investments within innovation and infrastructure.”
Turnaround
Lululemon as many may know had a problem with the quality of their yoga pants and the transparency of the material. After this mishap, Lululemon is in the process of a turnaround to improve the quality of their products. The company is expected to expand their product line to new styles, leading more into their men’s line and to solve supply chain issues. With the supply chain in focus, Lululemon is setting the ground works for an expanding international presence. Recently, a third distribution center Lululemon built last year has come online which is expected to cut shipping cost as well time to the East Coast by half. With the new distribution center and the tracking of inventories better in store, the company is betting on lowering their high inventory levels. Lululemon sees this process to take effect in the next few quarters.
LULU Stock Performance
On the earnings beat, Lululemon stock shot highe up nearly 10 percent, or $6.35. For the month of June, the stock is up $10.00 from its low. Now in sight of $68.00, the stock may have some trouble ahead as it runs into resistance. In mid April, Lululemon has bounced off of $70.00, its 52 week high, on three back to back days. This area may be a pivot spot for the stock, but if it breaks through, it looks to be smooth sailing with no resistance.
For the full year Lululemon sees revenue between $2 billion and $2.05 billion and earnings from $1.86 to $1.91.
About Lululemon Athletica
lululemon Athletica is a yoga-inspired athletic apparel company with products that create transformational experiences for people to live happy, healthy, fun lives. Setting the bar in technical fabrics and functional designs, lululemon works with yogis and athletes in local communities for continuous research and product feedback. For more information please visit www.lululemon.com.
