Lululemon Athletica Posts Upbeat Q1 Results, Raises FY21 Guidance

Lululemon Athletica (LULU) reported stronger-than-expected fiscal Q1 results, topping both earnings and revenue estimates driven by a robust performance across all segments. Shares of the lifestyle-inspired athletic apparel company have gained almost 2.4% over the past year.

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The company reported adjusted earnings of $1.16 per share in Q1, beating analysts’ expectations of $0.90 per share. Revenues of $1.2 billion also exceeded the consensus estimate of $1.12 billion.

Additionally, revenues jumped 88% year-over-year driven by strong growth in the e-commerce business and a rebound in brick and mortar stores. Gross margin grew 580 bps to 57.1% from the year-ago quarter. (See LULU stock analysis on TipRanks)

Based on robust Q1 results, management raised the financial guidance for FY2021. The company now forecasts adjusted earnings in the range of $6.73 to $6.86 per share, while the consensus estimate is pegged at $6.48 per share. Revenues are forecast to be in the range of $5.825 – 5.905 billion, versus the consensus estimate of $5.68 billion.

For the fiscal second quarter, adjusted earnings are likely to range between $1.10 and $1.15 per share, while the consensus estimate is pegged at $1.00 per share. Revenues are projected to be in the range of $1.30 billion to 1.33 billion, versus analysts’ expectations of $1.2 billion.

LULU CEO Calvin McDonald commented, “Our strong performance across categories, channels and geographies demonstrates the momentum and strength of lululemon as we shift into the new normal.”

Following the Q1 results, Stifel Nicolaus analyst Jim Duffy reiterated a Buy rating and a price target of $445 (37% upside potential) on the stock.

Duffy believes that the company’s guidance gives ample opportunity for upside based on expectations of improved market trends globally, increased vaccinations, and lower restrictions.

Overall, the stock has a Strong Buy consensus rating based on 12 Buys and 4 Holds. The average analyst price target of $388.94 implies 19.8% upside potential from current levels.