🏋️ Lululemon Athletica: Fitness In The Mirror?

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🏋️ Lululemon Athletica: Fitness In The Mirror?

Lululemon Athletica Inc (LULU) is flying high on an impressive Q4 earnings report with an even brighter outlook for 2021. (Tweet This)

Background
Founded in 1998, Vancouver, Canada-based Lululemon Athletica is a designer, distributor, and retailer of lifestyle-inspired athletic apparel and accessories. Initially a design studio by day and a yoga studio by night, Lululemon opened its first US-based store in 2003, and the company went public in 2007. Currently, the company has a market value of $41.33B with over 500 stores globally.

The athleisure company faced similar troubles as other clothing retailers during the pandemic. Lululemon was plagued by declining store visits and supply chain issues, with ocean shipping pretty much out of bounds during the worldwide lockdown. The company had to switch to using a costly alternative, airlifting products, which dented profit margins. At its worst, Lululemon had no option but to close stores temporarily.

Lululemon shifted to digital out of necessity as it strived to stay connected with its customers. This digital transformation helped the company’s stock to surge over 50% in 2020.

What Happened?
Lululemon reported the fiscal Q4 earnings that topped analyst estimates, thanks to its online business and the holiday season.

Q4 Key stats:

  • EPS: $2.58 Vs. $2.49 expected
  • Revenue: $1.73B, up 24% Y-o-Y Vs. $1.66B expected
  • Direct-to-consumer sales nearly doubled Y-o-Y, at 52%

Regarding the outlook, while expectation for 2021 revenue of $5.6B beat estimates of $5.41B, EPS fell short, with the company projecting $6.37, much below the consensus of $6.65.

A blessing in disguise for the company came with changing customer preferences, as many worked out within their homes. Thus, online sales grew by 92%, while Lululemon’s North American and international sales increased to 21% and 47%, respectively.

In keeping with customers’ preferences, Lululemon acquired an interactive at-home fitness equipment maker, Mirror, for $500M last year. Mirror brought $170M in revenue for 2020 and is expected to bring in revenues of up to $250M in 2021.

The company is on track to open 50 new stores this year and is also focusing on China as a potential growth market as physical fitness becomes a national priority.

Market reaction: LULU closed the day at $317.09, up 0.29%; in pre-market trading, the stock is down 1.47%.

Company Snapshot 📈

LULU $317.09 +0.93 (+0.29%)

Analyst Ratings (33 Analysts) BUY 64%   HOLD 33%   SELL 03%


Newsworthy 📰

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Crypto: PayPal launches crypto checkout service (PYPL +0.37%)

Blackout: BlackBerry misses fourth-quarter revenue estimates despite recovery in software sales (BB  +1.52%)


Later Today 🕒

  • Walgreens Boots Alliance Inc Earnings (WBA)
  • 5:45 PM IST: ADP employment report

Fun Fact of The Day 🌞

Canada is south of Detroit.

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