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Could Lululemon’s Growth Streak Continue?


Jun. 7 2019, Updated 2:03 p.m. ET

Year-to-date movement

Lululemon Athletica (LULU) stock has risen 16.1% since the company announced its fiscal 2018 fourth-quarter results in March. Lululemon is set to announce results for its fiscal 2019 first quarter (ended May 5) after markets close on June 12. The athletic apparel maker’s stock surged 14.1% on March 28 in reaction to the company’s strong fourth quarter, when its revenue rose 25.7% to $1.17 billion and its adjusted EPS increased 39.1% to $1.85.

This year, Lululemon stock had risen 40.1% as of June 6, while Nike (NKE), Under Armour (UAA), and Columbia Sportswear (COLM) had risen 11.2%, 45.3%, and 13.8%, respectively.

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First-quarter earnings forecast

Lululemon has exceeded analysts’ earnings expectations for eight consecutive quarters. In the first quarter, the company expects its EPS to rise year-over-year to $0.68–$0.70 from $0.55, and analysts expect them to rise 29.1% to $0.71 on revenue growth of 16.2%.

Higher revenue driven by international expansion and growing digital sales and modest gross margin improvement are expected to boost Lululemon’s first-quarter bottom line. The company expects its supply chain initiatives and scale efficiencies to mitigate the impact of growth investments on its profitability. In fiscal 2019, Lululemon expects EPS of $4.48–$4.55, and analysts expect the company’s adjusted EPS to rise 20.8% to $4.64.


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