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Lululemon Athletica’s Revenue Rose, Income Fell in Fiscal 3Q15

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Nov. 20 2020, Updated 11:15 a.m. ET

Price movement of Lululemon Athletica

Lululemon Athletica (LULU) has a market cap of $6.4 billion. Its YTD (year-to-date) price movement was a mix of rises and falls in fiscal 2015. After the fiscal 3Q15 earnings report, LULU fell by 13.1% to close at $45.32 per share as of December 9, 2015. The price movement on a weekly, monthly, and YTD basis is -7.5%, -9.7%, and -18.8%, respectively.

Technically, the stock has broken the support and is trading below all of its moving day averages. Currently, LULU is trading 7.7% below its 20-day moving average, 10.1% below its 50-day moving average, and 24.6% below its 200-day moving average.

The Vanguard Mid-Cap Growth ETF (VOT) invests 0.38% of its holdings in Lululemon Athletica. The ETF tracks a market-cap-weighted index of mid-cap growth companies selected by CRSP[1. Center for Research in Security Prices]. The YTD price movement of VOT is 0.66% as of December 8, 2015.

The competitors of Lululemon Athletica (LULU) and their market caps are:

  • NIKE (NKE) — $109.8 billion
  • Gap (GPS) — $10.8 billion
  • Express (EXPR) — $1.5 billion
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Performance of Lululemon Athletica in fiscal 3Q15

Lululemon Athletica (LULU) reported fiscal 3Q15 net revenue of $479.7 million, a rise of 14.4% when compared to net revenue of $419.4 million in fiscal 3Q14. It opened 18 new stores in fiscal 3Q15. The company’s cost of goods sold as a percentage of net revenue rose by 8.2% while its gross profit margin fell by 6.8% in fiscal 3Q15 as compared to the prior year period.

Net income and EPS (earnings per share) fell to $53.2 million and $0.38, respectively, in fiscal 3Q15, as compared to net income and EPS of $60.5 million and $0.42, respectively, in fiscal 3Q14. Its adjusted EPS fell to $0.35 in fiscal 3Q15, a fall of 16.7% as compared to the prior year period.

Meanwhile, Lululemon’s cash and cash equivalents fell by 25.5% while its inventories rose by 27.5%, in fiscal 3Q15 on a quarterly basis. The company’s current ratio fell to 4.5 in fiscal 3Q15, as compared to a current ratio of 6.2 in fiscal 2Q15.

Also, the company repurchased 1.6 million shares of its common stock at an average cost of $55.50 per share in fiscal 3Q15.

Projections

The company has projected the following for fiscal 4Q15:

  • net revenue in the range of $670 million to $685 million, based on total comparable sales in the mid-single digits on a constant dollar basis
  • diluted EPS in the range of $0.75 to $0.78

The guidance of diluted EPS assumes 139.0 million diluted weighted-average shares outstanding and a 29.5% tax rate.

Additionally, Lululemon expects the following for fiscal 2015:

  • net revenue in the range of $2.03 billion to $2.04 billion, based on total comparable sales in the high single digits on a constant dollar basis
  • diluted EPS in the range of $1.81 to $1.84, or $1.78 to $1.81 normalized for the tax and related interest adjustments made during fiscal 3Q15

The guidance of diluted EPS assumes 140.9 million diluted weighted-average shares outstanding and a 27.6% tax rate. This projection doesn’t include future repurchases of the company’s shares.

Visit Market Realist’s Clothing and Apparel page for an in-depth fundamental analysis of the sector.

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