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How Did Lululemon Athletica Perform in 3Q16?

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Price movement

Lululemon Athletica (LULU) has a market cap of $8.4 billion. It rose 4.5% to close at $59.84 per share on December 7, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 5.0%, 7.4%, and 14.1%, respectively, on the same day.

LULU is trading 4.8% above its 20-day moving average, 3.9% above its 50-day moving average, and 9.5% below its 200-day moving average.

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Related ETF and peers

The iShares MSCI USA Quality Factor (QUAL) invests 0.10% of its holdings in Lululemon Athletica. The YTD price movement of QUAL was 7.2% on December 7.

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

  • Nike (NKE): $87.1 billion
  • Gap (GPS): $10.9 billion

Performance of Lululemon Athletica in fiscal 3Q16

Lululemon Athletica reported fiscal 3Q16 net revenue of $544.4 million, a rise of 13.5% compared to $479.7 million in fiscal 3Q15. The company’s gross profit margin and operating margin expanded 420 basis points and 290 basis points, respectively, in fiscal 3Q16 compared to the prior year’s period.

Its net income and EPS (earnings per share) rose to $68.3 million and $0.50, respectively, in fiscal 3Q16 compared to $53.2 million and $0.38, respectively, in fiscal 3Q15. It reported adjusted EPS of $0.47 in fiscal 3Q16, a rise of 34.3% compared to fiscal 3Q15.

LULU’s cash and cash equivalents fell 4.2%, and its inventories rose 28.3% between fiscal 3Q16 and fiscal 4Q15.

Projections

Lululemon has made the following projections for fiscal 4Q16:

  • net revenue of $765.0 million–$785.0 million
  • EPS of $0.96–$1.01
  • tax rate of 31.2%

The company has made the following projections for fiscal 2016:

  • net revenue of $2.32 billion–$2.34 billion
  • EPS of $2.18–$2.23
  • tax rate of 28.2%

In the next and final part of this series, we’ll look at Altria Group (MO).

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