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Lululemon Stock Rose 10.7% on Upbeat Fiscal 4Q16: What’s Next?

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Lululemon Athletica’s fiscal 2016 performance

Canadian activewear company Lululemon Athletica (LULU) released its fourth quarter and full-year results for fiscal 2016 on March 30, 2016. The fiscal year ended on February 1, 2016. The yoga-inspired athleisurewear company achieved revenue growth of 14.7% in the year, crossing the $2 billion mark in annual sales for the first time in its history.

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Lululemon beats Wall Street expectations

Lululemon also beat Market expectations by a long shot, with both adjusted EPS (earnings per share) and revenue coming in ahead of consensus Wall Street analyst estimates.

  • Fourth quarter adjusted EPS came in at $0.85, which was 6.4% ahead of the consensus analyst estimate of $0.80.
  • Fiscal 4Q16 sales came in at ~$704 million, which was 1.6% higher than Market expectations of ~$693 million.

2020 guidance

On the earnings call, Lululemon’s management provided guidance for fiscal 2017 and discussed the company’s plans for the next five years. According to CEO (chief executive officer) Laurence Potdevin, “Our deliberate focus on being design-led is fueling our growth and our focus on operational excellence is driving our earnings expansion.” Referring to the five-year growth plan, he added, “We also saw important progress in building key capabilities to support how we will scale the business in the coming years.”

You’ll read about the company’s outlook in greater detail in Parts 5 and 6 of this series.

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Stock price spike

LULU stock rose 10.7% to $67.80 on March 30, 2016, the day the company declared its results and became one of the best performers in the industry this year. You can read about the company’s recent stock market performance in Part 7 of this series.

How did peers perform?

Lululemon’s rivals in the activewear space, Nike (NKE) and Under Armour (UA), also beat analyst expectations on adjusted EPS in their last respective quarters. However, Hanesbrands (HBI) and VF Corporation (VFC) missed the Market consensus on both revenue and adjusted EPS. UA and VFC are slated to declare results for 1Q16 in late April.

Growth stocks LULU, NKE, UA, VFC, and HBI together constitute 1.7% of the portfolio holdings of the Vanguard Growth ETF (VUG).

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