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What to Expect from Lululemon Q1 Earnings with LULU Stock Up 40% in 2019


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Lululemon LULU stock has climbed over 41% in 2019. This climb helps LULU come in well above its industry's 15% average jump and sportswear giant Nike's NKE 12% gains. Now it's time to dive into what investors should expect from the yoga apparel giant's first quarter fiscal 2019 financial results that are due out after the closing bell Wednesday.  

LULU Overview & Growth Plans

Lululemon's rise into a sports apparel powerhouse helped spawn the more widespread use of the word athleisure. The company's success and expansion has seen Nike, Adidas ADDYY , Puma, Gap GPS , L Brands' LB Victoria's Secret, and others roll out more complete athleisure's lines for both men and women. The style and clothing that Lululemon helped popularize on the higher-end has also sparked off-priced athleisure expansion from Target TGT and others.

The Vancouver-based company has also expanded its menswear business and bolstered its outwear offerings to better compete with the likes of Canada Goose GOOS and V.F. Corporation's VFC The North Face. Plus, LULU is set to roll out selfcare products and currently sells a more robust lineup of work appropriate/business clausal clothes.

Lululemon operates a mostly direct-to-consumer business, which is perfect in today's Amazon AMZN -obsessed retail age that has seen department stores like Macy's M , J.C. Penney JCP , Kohl's KSS , and Nordstrom JWN suffer. And last month, company management laid out its new five-year growth plans. Lululemon now expects to more than double the size of its men's revenues by 2023 as part of its "Power of Three Growth Strategy."

Executives also expect to more than double the company's digital revenue during this period and quadruple its international sales. This expansion includes the firm's presence across social media outlets such as Instagram FB , and a deeper push into China and beyond. For reference, Lululemon ended the fourth quarter with 440 total company-operated stores, up from 404 in the year-ago period.

Outlook & Earnings Trends

LULU stock is up roughly 41% in 2019 and 37% over the last 12 months. Shares of Lululemon hovered at around $171.98 through late afternoon trading Tuesday, down roughly 4.5% from its 52-week highs. Investors will also notice the impressive run that Lululemon stock has been on in the past five years.

Looking ahead, our current Zacks Consensus Estimate calls for the company's first-quarter revenue to pop 16.5% to reach $757.1 million. Last quarter, during the vital holiday shopping period, the athleisure firm's revenue jumped roughly 26% to $1.2 billion to easily top Q4 2017's 17.6% expansion.

Meanwhile, at the bottom end of the income statement, Lululemon is projected to see its adjusted first-quarter earnings soar 29% to $0.71 a share. Like with its projected Q1 top-line growth, this would mark a slowdown from Q4's 39% earnings expansion.

With that said, the company's earnings estimate revision activity has trended heavily upward recently, especially for Q1 and fiscal 2019 and 2020. Plus, LULU has a strong history o f quarterly earnings beats, which includes a 20% average surprise over the trailing four periods.

On top of that, investors should know that shares of Lululemon trade very heavily around earnings, with double-digit percentage movements in the last four quarters. This makes the prospect of buying LULU stock ahead o f earnings both enticing and nerve-racking. Yet, with the stock on such a strong run, long-term holders have seemingly little to worry about no matter how Wall Street reacts in the immediate aftermath.

Bottom Line

Lululemon is a Zacks Rank #2 (Buy) right now, based in large part, on its positive earnings estimate revision activity. Furthermore, LULU sports an "A" grade for Growth and a "B" for Momentum in our Style Scores system. Investors should pay close attention to any and all updates regarding Lululemon's menswear, e-commerce sales, and international expansion-particularly in China.

Lululemon is scheduled to release its Q1 fiscal 2019 financial results after the closing bell on Wednesday, June 12. Make sure to come back to Zacks for a complete breakdown after the firm reports its actual quarterly metrics. 

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Amazon.com, Inc. (AMZN): Free Stock Analysis Report

Facebook, Inc. (FB): Free Stock Analysis Report

L Brands, Inc. (LB): Free Stock Analysis Report

Nordstrom, Inc. (JWN): Free Stock Analysis Report

The Gap, Inc. (GPS): Free Stock Analysis Report

Canada Goose Holdings Inc. (GOOS): Free Stock Analysis Report

lululemon athletica inc. (LULU): Free Stock Analysis Report

Target Corporation (TGT): Free Stock Analysis Report

J. C. Penney Company, Inc. (JCP): Free Stock Analysis Report

Macy's, Inc. (M): Free Stock Analysis Report

Kohl's Corporation (KSS): Free Stock Analysis Report

Adidas AG (ADDYY): Free Stock Analysis Report

NIKE, Inc. (NKE): Free Stock Analysis Report

V.F. Corporation (VFC): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.





This article appears in: Investing , Earnings
Referenced Symbols: AMZN , FB , LB , JWN , GPS



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