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Strong Results, Optimistic Guidance Drove Lululemon Stock Higher

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Lululemon raised fiscal 2018 guidance

Buoyed by its first-quarter performance, Lululemon Athletica’s (LULU) management raised the company’s 2018 guidance. The company now expects total sales of $3.04 billion–$3.08 billion compared to the prior outlook of $2.99 billion–$3.02 billion.

The updated guidance reflects a 15% increase at the midpoint compared to last year and assumes a high-single-digit growth in comparable sales. The company is also looking to add 40–50 company-operated stores during the year.

Adjusted diluted EPS is expected to be $3.10–$3.18, reflecting a 21% growth at the midpoint. Earlier, the company was expecting $3–$3.08.

Management continues to expect a modest improvement in LULU’s gross margin and a slight leverage in SG&A (selling, general, and administrative) expenses in fiscal 2018. The effective tax rate for the year is projected at 30% compared to 29% guided earlier.

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LULU’s performance boosted investor confidence

Lululemon’s strong results and upbeat guidance have boosted investor confidence. The stock surged a massive 16% on June 1, touching its record high. The stock run continued the next trading day, rising another 2%.

Lululemon is trading at $124.98 as of June 4 and has risen 130% over the last year. Other sportswear companies have also posted solid returns, although LULU is the best of the lot. Nike (NKE), Columbia Sportswear (COLM), and Skechers (SKX) have risen 40%, 61%, and 11%, respectively, over the past year.

So is there still any upside left in Lululemon stock? Read the next part to know more.

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