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Why Lululemon Stock Is Rising Today

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Dec. 4 2020, Updated 10:53 a.m. ET

Stock rises on improved outlook

Lululemon Athletica (LULU) stock was up over 3.0% in pre-market trading today after the company raised its guidance for the fourth quarter of fiscal 2018, which ends on February 3, 2019. The stock was up over 5.0% as of 9:52 AM EST today.

The athletic apparel company now expects its fourth-quarter revenue in the range of $1.14 billion to $1.15 billion compared to the previous outlook range of $1.115 billion to $1.125 billion. Lululemon expects its comparable sales (on a constant currency basis) to grow in the mid-to-high teens range in fiscal 2018 compared to the previously issued forecast of high-single to low-double-digit growth. The updated guidance reflects the company’s strong performance in the holiday season, which is a crucial sales period for retailers.

Lululemon expects its fourth-quarter adjusted EPS in the $1.72 to $1.74 range. The company had earlier forecasted EPS of $1.64 to $1.67 for the fourth quarter of fiscal 2018.

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Upbeat performance

Lululemon had announced strong results for the fiscal 2018 third quarter after financial markets closed on December 6. The company’s net revenue grew 20.8% to $747.7 million, and adjusted EPS increased 33.9% to $0.75 in the fiscal 2018 third quarter. However, despite the upbeat performance, Lululemon stock declined 13.4% on December 7, as investors were disappointed with the fourth-quarter outlook.

Overall, Lululemon stock was up by an impressive 54.7% in 2018 compared to the 18.5% rise in Nike (NKE) and 22.5% growth in Under Armour (UAA) stocks. Lululemon’s focus on innovation, robust online sales, and initiatives to drive its men’s business are helping the company deliver strong results.

Unlike Lululemon, retailers like JCPenney (JCP) and Macy’s (M) struggled to deliver strong holiday sales numbers, as competition in the retail space has intensified with the growth of online retailers.

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