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Alberto Abaterusso
Alberto Abaterusso
Articles (1556) 

Lululemon Jumps on Earnings Beat

The Canadian apparel stores company increases comparable sales

June 13, 2019 | About:

Shares of Lululemon Athletica Inc. (NASDAQ:LULU) were up 5.34% to $180.01 in after-hour trading on Wednesday after beating first-quarter GAAP earnings estimates by 4 cents. The company posted earnings of 74 cents per diluted share, up 34.5% from the prior-year quarter.

Revenue increased 20% year-over-year to $782 million, topping analysts' projections by $26.83 million. Total comparable sales grew 16%, with an 8% increase in comparable store sales and 35% increase in direct-to-consumer sales. Direct-to-consumer sales accounted for 26.8% of total net revenue in the first quarter of fiscal 2019 versus 24.3% for the analogous quarter of fiscal 2018.

The Canadian apparel stores company also reported a 22% increase in gross profit to $421.7 million and an 80 basis-point increase in gross margin to 53.9%. Further, income from operations grew 23% to nearly $129 million, for a 40 basis-point jump in operating margin to 16.5%. The effective tax rate improved 350 basis points to 26.4%. Inventories went up 19% to $443 million. Lululemon operated 455 stores in the first quarter of fiscal 2019 versus 411 stores in the first quarter of fiscal 2018.

“Lululemon continues to see strong momentum across the entire business. I'm inspired by our teams who are executing at high levels, and I want to thank everyone across the globe for their passion and dedication to the brand. I look forward to the opportunities ahead of us, and delivering on our Power of Three five-year vision,” CEO Calvin McDonald said.

Lululemon Athletica lifted its full fiscal-year 2019 revenue outlook to a range of $3.73 billion to $3.77 billion, from a previous range of $3.70 billion to $3.74 billion and compared to estimates of $3.77 billion. Also, the company anticipates earnings per share of $4.51 to $4.58 versus a previous range of $4.48 to $4.55 and compared to estimates of $4.64.

In addition, as of May 5, the company has $576.2 in cash on hand and equivalents, which represents a 40.4% decline from the final quarter of fiscal 2018.

Lululemon Athletica closed at $170.9 per share on Wednesday for a market capitalization of $22.26 billion. The stock climbed 36% over the 52 weeks through June 12 to above the 200- and 100-day simple moving average lines. The share price at close on Wednesday is slightly below the 50-day SMA line.

The closing price on Wednesday was 54.4% above the 52-week low of $110.71 and 5% below the 52-week high of $179.50.

Lululemon Athletica has outperformed the S&P 500 index by nearly 33% so far this year.

Disclosure: I have no positions in any securities mentioned.

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About the author:

Alberto Abaterusso
If somebody asks what being a value investor means, Alberto Abaterusso would answer, “The value investor is not just the possessor of the security that represents the company, but he is the owner of that company. As an owner of the company the value investor is actively involved in the dynamics of that company and his first concern is how to have sales progressively growing. Also, the value investor is probably one of the most demanding persons in the world concerning sales.”

Abaterusso is a freelance writer based in The Netherlands. He primarily writes about gold, silver and precious metals mining stocks. His articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. Alberto holds an MBA from Università degli Studi di Bari (Italy), Aldo Moro.

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