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How Did Lululemon Athletica’s 1Q16 Earnings Turn Out?

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Jun. 9 2016, Published 2:36 p.m. ET

Price movement 

Lululemon Athletica (LULU) has a market cap of $9.8 billion. It rose by 4.9% to close at $71.48 per share on June 8, 2016. The stock’s weekly, monthly, and YTD (year-to-date) price movements were 8.0%, 11.6%, and 36.2%, respectively, that day. This means that LULU is trading 12.3% above its 20-day moving average, 10.6% above its 50-day moving average, and 23.9% above its 200-day moving average.

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Related ETF and peers

The Vanguard Mid-Cap ETF (VO) invests 0.19% of its holdings in Lululemon Athletica. The ETF tracks the CRSP US Mid-Cap Index, a diversified index of midcap US companies. The YTD price movement of VO was 5.4% as of June 8, 2016.

The market cap of Lululemon Athletica’s competitors are as follows:

  • Nike (NKE): $91.2 billion
  • Gap (GPS): $7.8 billion
  • Express (EXPR): $1.2 billion

Performance of Lululemon Athletica in fiscal 1Q16

Lululemon Athletica reported fiscal 1Q16 net revenues of $495.5 million, a rise of 17.0% over the net revenues of $423.5 million in fiscal 1Q15. The company’s gross profit margin and income from operations fell by 0.62% and 15.3%, respectively, between fiscal 1Q16 and the prior year.

Its net income and EPS (earnings per share) fell to $45.3 million and $0.33, respectively, in fiscal 1Q16, compared with $47.8 million and $0.34, respectively, in fiscal 1Q15.

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LULU’s cash and cash equivalents and inventories rose by 9.7% and 0.77%, respectively, between fiscals 4Q15 and 1Q16. Its current ratio rose to 4.8x and its debt-to-equity ratio fell to 0.23x in fiscal 1Q16, compared with a current ratio and a debt-to-equity ratio of 4.1x and 0.28x in fiscal 4Q15. During fiscal 1Q16, the company repurchased 0.2 million shares of its common stock at an average price of $65.01 per share.

Projections

The company has made the following projections for 2Q16 and 2016:

Fiscal 2Q16

  • net revenue in the range of $505 million to $515 million based on total comparable sales in the mid-single digits on a constant-dollar basis
  • EPS in the range of $0.36 to $0.38
  • weighted-average shares outstanding of 137.5 million
  • tax rate of 30.2%

Fiscal 2016

  • net revenue in the range of $2.3 billion to $2.35 billion based on total comparable sales in the mid-single digits on a constant-dollar basis
  • EPS in the range of $2.08 to $2.18, or $2.05 to $2.15 normalized for tax and interest adjustments made during fiscal 1Q16
  • weighted-average shares outstanding of 137.5 million
  • tax rate of 28.9%

In the next part of this series, we’ll take a look at Under Armour.

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