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Analyzing Lululemon Athletica’s Market-Moving Fiscal 2015 Results

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Apr. 13 2015, Published 5:05 p.m. ET

Lululemon Athletica’s fiscal 2015 earnings release

Lululemon Athletica (LULU) reported its 4Q15 and fiscal 2015 (with the quarter and year ending February 1, 2015) results on March 26. Sales spiked 12.9% to $1.8 billion in fiscal 2015, compared with $1.6 billion the previous year. In the fourth quarter, revenue was higher by 15.6%, coming in at $602.5 million.

Sales came in ~0.5% ahead of consensus Wall Street analyst estimates. This was the 12th quarter out of 13 that the company had beaten Wall Street expectations. In 3Q15, Lululemon Athletica missed revenue estimates by 1.2%.

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LULU jumps on earnings beat

Lululemon Athletica also delivered an earnings beat in the quarter. Its adjusted earnings per share (or EPS) came in at $0.78 in 4Q15. This was higher than the company’s earlier guidance of $0.71–$0.73 per share provided in January. Its EPS also beat consensus Wall Street analyst estimates of $0.73. For the full year, LULU reported an adjusted EPS of $1.89, higher than its earlier guidance of $1.80–$1.82 per share. Consensus Wall Street analyst estimates had projected $1.82 per share.

The company’s strong showing in fiscal 2015 was market-moving. LULU’s stock price and valuations spiked, which we’ll explore in Part 4 of this series. More importantly, the quarter’s strong results eliminated fears that the company’s products were failing to resonate with customers. It also confirmed that the company’s efforts toward transformation were headed in the right direction.

Lululemon Athletica’s competitor in sportswear, Nike (NKE) released its 3Q15 earnings on March 26. Nike spiked to an all-time high, crossing the psychological $100 mark on the results. Other LULU competitors, Under Armour (UA) and VF Corporation (VFC), will release their 1Q15 earnings later this month. NKE, UA, and VFC together constitute ~4.74% of the portfolio holdings in the Consumer Discretionary Select Sector SPDR Fund (XLY).

Same-store sales

The fourth quarter of 2015 was the second consecutive quarter that the company reported positive total same-store sales growth. Lululemon Athletica reported a 6% increase in total same-store sales in 4Q15. Total same-store sales growth includes comparable sales from its corporate-owned stores open at least a year, as well as e-commerce sales growth.

The same-store sales for brick-and-mortar stores grew 2% in the quarter. This was the first quarter since 3Q14 that the company had reported positive comps for corporate-owned stores.

For a detailed business overview of LULU, please read our earlier series, Company Overview: An Investor’s Key Guide to Lululemon Athletica.

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