Shares of Lululemon Athletica (LULU) gained in pre-market trading after the athletic apparel retailer raised its Q4 forecast. The company now expects its Q4 revenues to be in the range of $3.56 billion to $3.58 billion, indicating growth of 11% to 12% year-over-year.
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LULU’s raised forecast is above the company’s prior guidance, which ranged from $3.48 billion to $3.51 billion. For reference, analysts were expecting Q4 revenues of $3.47 billion.
LULU Raises Q4 Earnings Forecast
Furthermore, the retailer now estimates Q4 diluted earnings in the range of $5.81 to $5.85 per share, compared to its previous forecast of $5.56 to $5.64 per share. The company’s new earnings outlook is above consensus estimates of $5.66 per share.
Meghan Frank, LULU’s CFO, commented, “During the holiday season, our guests responded well to our product offering, enabling us to increase our fourth-quarter guidance.”
Why Has LULU Raised Its Q4 Outlook?
Usually, for retailers, the fourth quarter is a seasonally strong period. The 2024 holiday season (the fourth quarter) saw retailers engage in heavy promotions, with customers increasingly shopping on mobile phones. These customers used AI chatbots to compare prices, evaluate shipping times, and review return policies.
Additionally, to stay competitive, retailers like Lululemon and Abercrombie (ANF) introduced fresh colors and styles to captivate shoppers and counter newer brands. Meanwhile, Nordstrom (JWN) raised its annual forecast, fueled by strong holiday sales, as deep discounts on apparel and home decor attracted bargain hunters to its outlets.
Is LULU a Good Stock to Buy?
Analysts remain cautiously optimistic about LULU stock, with a Moderate Buy consensus rating based on 15 Buys, seven Holds, and one Sell. Over the past year, LULU has declined by more than 10%, and the average LULU price target of $398.09 implies an upside potential of 0.6% from current levels.
