Lululemon Athletica Inc (LULU) is gearing up to release its quarterly financial results after the market closes on Thursday. Analysts anticipate strong performance, projecting revenue of $2.41 billion and earnings per share of $2.94 for the second quarter, according to data from Benzinga Pro. This would mark a significant jump from the $2.21 billion revenue and $2.68 earnings per share reported in the same period last year.
Lululemon has established a consistent track record of exceeding analyst expectations, having beaten revenue estimates for nine consecutive quarters and earnings per share estimates for more than ten quarters. The company’s own guidance predicts second-quarter revenue to fall between $2.4 billion and $2.42 billion, with earnings per share expected to range from $2.92 to $2.97.
However, despite the positive outlook, analysts remain divided on Lululemon’s future performance. Some express concerns about recent challenges, including increased competition from brands like Vuori and Alo Yoga, as well as declining store traffic. Truist analyst Joseph Civello, while maintaining a Buy rating and a $310 price target, acknowledges these challenges but believes the stock is currently undervalued. He cites Lululemon’s strong brand and international growth potential as reasons for optimism.
On the other hand, Goldman Sachs analyst Brooke Roach has downgraded shares from Buy to Neutral, lowering the price target from $463 to $286. Roach highlights concerns regarding execution challenges, increased promotional activity, and underperforming website traffic compared to competitors.
Investors and analysts alike will be closely watching key metrics during the earnings call. International growth, particularly in light of the company’s 35% year-over-year revenue increase in international markets during the first quarter, will be a significant focus. Product innovation and new store openings are also expected to be closely examined, with investors hoping for positive updates on these fronts. Additionally, consumer spending and same-store sales will be critical indicators of the company’s ability to navigate a competitive market and maintain its position as a leading activewear brand.
Despite the challenges and mixed analyst sentiment, Lululemon remains a popular brand in the activewear market. The company’s performance in the second quarter will be crucial in determining its ability to overcome recent obstacles and maintain its strong growth trajectory.
