Lululemon Athletica Inc. (NASDAQ: LULU) is expected to release its Q2 2021 earnings on September 8, 2021, after markets close.
What to look for
The leisurewear company was a standout performer over the pandemic, considering more people took regular exercise as a hobby. In recent quarters Lululemon has performed well boosted by various factors, including its position in women's activewear and expansion of the resale arm through a partnership with Trove. The solid direct-to-consumer unit will contribute significantly to sales in Q2. In addition, the company has enhanced digital growth, and in Q1, its revenue for the e-commerce segment was up 55%. Total e-commerce sales accounted for 44.4% of the company's total revenue.
Earnings: Stockearning’s Estimated EPS for Lululemon for Q2 will be $1.2 per share, representing a 60% YoY increase. Historical EPS performance shows that over the past 12 quarters, the company has beat EPS estimates 11 times (91%) and missed only once (8%). In the first quarter, the company had an actual EPS of $1.16 compared to an estimate of $0.91.
Revenue: In the first quarter, revenue was up 88% to $1.2 billion, and on a constant dollar basis, Lululemon’s net revenue was up 83%. The company reported diluted EPS of $1.11 relative to $0.22 per share in Q1 2020, while adjusted diluted earnings were $1.16 per share. For Q2 2021, the company anticipates revenue of between $1.3 billion and $1.33 billion and an earnings range of $1.05 per share and $1.1 per share with adjusted diluted earnings per share of between $1.1 and $1.15 per share. Lululemon expects full-year revenue of $5.825 billion to $5.905 billion.
Stock Movement: Lulemon stock has gained 22.4% since the last earnings release. After the earnings release, the company's stock price has been UP in 29 quarters over the past 46 quarters. Therefore historical price reaction predicts a 63% chance of share price going UP following the Q2 2022 earnings release. According to Stockearning’s algorithm, the predicted first-day move on the stock after earnings release is 8%, while the predicted move after seven days is 9%.
What analysts are saying
Recently B. Riley analysts Susan Anderson raised her price target on Lululemon from $370 to $466 and maintained the “Buy” rating on the stock. The analyst expects the company to continue posting double digital sales growth, and the solid retail trends will go on in Q2 with consumer spending increasing as they become comfortable with return in normalcy, resulting in the need for refreshing wardrobes. In addition, Anderson said that the company saw a return to in-store traffic, driving sales higher in a note to investors.
Also, JPMorgan analyst Matthew Boss raised the company's price target on Lululemon from $400 to $450 and maintained a "Buy" rating on the stock. Boss expects the company to beat Q2 sales in department stores as well as specialty softlines.
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