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Lululemon Athletica Revised Its Guidance for 4Q16

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Price movement

Lululemon Athletica (LULU) has a market cap of $9.4 billion. It fell 0.12% and closed at $68.19 per share on January 9, 2017. The stock’s weekly, monthly, and YTD (year-to-date) price movements were 4.9%, 14.0%, and 4.9%, respectively, on the same day. Luluemon Athletica is trading 1.7% above its 20-day moving average, 11.7% above its 50-day moving average, and 2.4% above its 200-day moving average.

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Related ETF and peers

The iShares Edge MSCI USA Quality Factor ETF (QUAL) invests 0.10% of its holdings in Lululemon Athletica. QUAL’s YTD price movement was 1.0% on January 9.

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

  • Nike (NKE) – $87.5 billion
  • Gap (GPS) – $9.5 billion

Performance in fiscal 3Q16

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

Its net income and EPS (earnings per share) rose to $68.3 million and $0.50, respectively, in fiscal 3Q16—compared with $53.2 million and $0.38 in fiscal 3Q15. It reported adjusted EPS of $0.47 in fiscal 3Q16—a rise of 34.3% from fiscal 3Q15. Lululemon Athletica’s cash and cash equivalents fell 4.2% and its inventories rose 28.3% between fiscal 3Q16 and fiscal 4Q15.

Projections

Lululemon updated the following projections for 4Q16:

  • net revenue of $775 million–$785 million
  • EPS of $0.99–$1.01
  • tax rate of 31.2%

The company 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 part, we’ll look at Hormel Foods (HRL).

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