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Lululemon Athletica (LULU)
NASDAQ:LULU
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Lululemon Athletica
(NASDAQ:LULU)
75Outperform
Positive Factors
Company Performance
LULU reported a top- and bottom-line beat with U.S. sales that grew slightly and better product margin driven by lower markdowns.
International Growth
International growth remains a bright spot for LULU, accounting for 25% of sales, with China's growth being robust.
Product and Consumer Response
The consumer is responding favorably to newness in the assortment, translating to better unit per transaction and average transaction size.
Negative Factors
Inventory Management
Rising inventory levels pose a risk of increased markdowns if the higher inventory does not sell through.
Tariffs and Costs
The bulk of Lululemon's products are sourced from countries targeted with outsized tariffs, leading to a significant potential impact on costs.
US Market Performance
Revenue growth in the Americas has slowed significantly, with the US business heading towards negative growth.
Lululemon Athletica (LULU) vs. S&P 500 (SPY)
Market Cap
$32.15B
Dividend YieldN/A
Average Volume (3M)2.48M
Price to Earnings (P/E)17.9
Beta (1Y)0.78
Revenue Growth10.07%
EPS Growth20.40%
CountryUS
Employees39,000
SectorConsumer Cyclical
Sector Strength46
IndustryApparel - Retail
Share Statistics
EPS (TTM)14.73
Shares Outstanding115,521,230
10 Day Avg. Volume4,305,387
30 Day Avg. Volume2,482,185
Financial Highlights & Ratios
PEG Ratio0.88
Price to Book (P/B)N/A
Price to Sales (P/S)3.70
Price to Cash Flow (P/CF)31.30
P/FCF Ratio77.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$372.00Price Target Upside41.07% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering27
Lululemon Athletica Business Overview & Revenue Model
Company Descriptionlululemon athletica inc., together with its subsidiaries, designs, distributes, and retails athletic apparel and accessories for women and men. It operates in two segments, Company-Operated Stores and Direct to Consumer. The company offers pants, shorts, tops, and jackets for healthy lifestyle and athletic activities, such as yoga, running, and training, as well as other sweaty pursuits. It also provides fitness-related accessories and footwear. The company sells its products through a chain of company-operated stores; outlets and warehouse sales; interactive workout platform; a network of wholesale accounts, such as yoga studios, health clubs, and fitness centers; temporary locations; and license and supply arrangements, as well as directly to consumer through mobile apps and lululemon.com e-commerce website. As of January 30, 2022, it operated 574 company-operated stores under the lululemon brand in the United States, Canada, the People's Republic of China, Australia, the United Kingdom, Japan, New Zealand, Germany, South Korea, Singapore, France, Malaysia, Sweden, Ireland, the Netherlands, Norway, and Switzerland. lululemon athletica inc. was founded in 1998 and is based in Vancouver, Canada.
How the Company Makes MoneyLululemon Athletica generates revenue primarily through the sale of its apparel and accessories. The company's key revenue streams include its network of physical retail stores, a rapidly growing e-commerce platform, and direct-to-consumer sales. Lululemon's product offerings include yoga pants, shorts, tops, jackets, and accessories like bags and water bottles. The company's e-commerce channel has been a significant growth driver, allowing it to reach a global audience and complement its brick-and-mortar presence. Additionally, Lululemon frequently introduces product innovations and limited-edition collections, which help drive customer interest and sales. The company also benefits from strategic partnerships and collaborations that enhance its brand visibility and expand its market reach.
Lululemon Athletica Financial Statement Overview
Summary
Lululemon Athletica exhibits strong financial performance with impressive revenue growth and profitability metrics. A solid balance sheet with low debt levels and high ROE, complemented by strong cash flow generation, indicates robust financial health. The minor dip in free cash flow growth is a point to monitor, but overall, the company's financials are stable and promising.Income Statement
Lululemon Athletica demonstrates strong revenue growth with a TTM increase of 10.10% from the previous year. The company maintains robust profitability metrics, with a gross profit margin of 59.21% and a net profit margin of 17.14% for the TTM. EBIT and EBITDA margins are also impressive at 23.94% and 26.80% respectively, indicating efficient operations and effective cost management.95
Very Positive
Balance Sheet
The company's balance sheet is solid, with a debt-to-equity ratio of 0.36, showcasing a strong equity position. The return on equity (ROE) stands at 41.57%, reflecting excellent profitability for shareholders. Additionally, an equity ratio of 57.42% indicates a healthy capital structure and low financial leverage.90
Very Positive
Cash Flow
Lululemon's cash flow is strong, with a free cash flow to net income ratio of 0.87, indicating effective cash generation relative to profits. The operating cash flow to net income ratio is 1.25, highlighting strong cash conversion efficiency. However, the free cash flow has slightly decreased by 3.70% compared to the previous year, which may warrant monitoring.85
Very Positive
| Breakdown | |||||
| TTM | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 | Mar 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 10.59B | 9.62B | 8.11B | 6.26B | 4.40B | 3.98B | Gross Profit |
| 6.27B | 5.61B | 4.49B | 3.61B | 2.46B | 2.22B | EBIT |
| 2.53B | 2.13B | 1.33B | 1.33B | 819.99M | 889.11M | EBITDA |
| 2.84B | 2.59B | 2.02B | 1.60B | 1.00B | 889.11M | Net Income Common Stockholders |
| 1.81B | 1.55B | 854.80M | 975.32M | 588.91M | 645.60M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 224.78M | 2.24B | 1.15B | 1.26B | 1.15B | 1.09B | Total Assets |
| 418.97M | 7.09B | 5.61B | 4.94B | 4.19B | 3.28B | Total Debt |
| 0.00 | 1.40B | 1.07B | 881.05M | 798.68M | 739.96M | Net Debt |
| -224.78M | -840.69M | -84.53M | -378.82M | -351.84M | -353.54M | Total Liabilities |
| 92.30M | 2.86B | 2.46B | 2.20B | 1.63B | 1.33B | Stockholders Equity |
| 322.15M | 4.23B | 3.15B | 2.74B | 2.56B | 1.95B |
| Cash Flow | Free Cash Flow | ||||
| 1.58B | 1.64B | 327.81M | 994.61M | 574.11M | 386.27M | Operating Cash Flow |
| 2.27B | 2.30B | 966.46M | 1.39B | 803.34M | 669.32M | Investing Cash Flow |
| -798.17M | -654.13M | -569.94M | -427.89M | -695.53M | -278.41M | Financing Cash Flow |
| -1.65B | -548.83M | -467.49M | -844.99M | -80.79M | -177.17M |
Lululemon Athletica Technical Analysis
Negative
263.70
Price Trends
354.25
Negative
358.15
Negative
317.20
Negative
Market Momentum
-16.28
Positive
26.19
Positive
5.16
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LULU, the sentiment is Negative. The current price of 263.7 is below the 20-day moving average (MA) of 311.33, below the 50-day MA of 354.25, and below the 200-day MA of 317.20, indicating a bearish trend. The MACD of -16.28 indicates Positive momentum. The RSI at 26.19 is Positive, neither overbought nor oversold. The STOCH value of 5.16 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for LULU.
Lululemon Athletica Risk Analysis
Lululemon Athletica disclosed 39 risk factors in its most recent earnings report. Lululemon Athletica reported the most risks in the “Production” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Lululemon Athletica Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $4.19B | 10.61 | 17.56% | ― | 7.71% | 40.01% | |
75 Outperform | $32.15B | 17.91 | 42.42% | ― | 10.07% | 20.40% | |
75 Outperform | $12.19B | 46.34 | 19.62% | ― | 31.95% | 209.45% | |
73 Outperform | $6.69B | 8.12 | 28.81% | 3.36% | 1.32% | 65.83% | |
67 Neutral | $1.80B | 6.23 | 18.80% | 4.79% | 1.27% | 96.32% | |
59 Neutral | $12.18B | 11.09 | -1.08% | 3.77% | 1.26% | -19.82% | |
44 Neutral | $47.77M | ― | -65.03% | ― | -25.31% | 40.84% |
* Consumer Cyclical Sector Average
Performance Comparison
LULU
Lululemon Athletica
263.70
-96.76
-26.84%
AEO
American Eagle
10.94
-12.88
-54.07%
GAP
Gap Inc
19.13
-3.74
-16.35%
URBN
Urban Outfitters
46.61
6.90
17.38%
ONON
On Holding AG
39.61
7.04
21.61%
BIRD
Allbirds
5.28
-7.52
-58.75%
Lululemon Athletica Earnings Call Summary
Earnings Call Date: Mar 27, 2025 | % Change Since: -22.79% | Next Earnings Date: May 29, 2025
Earnings Call Sentiment Neutral
Lululemon's earnings call highlighted strong revenue growth and successful product innovation. However, challenges in the U.S. market due to traffic declines and significant FX and tariff headwinds are expected to pressure margins in 2025.Highlights
Revenue Growth Exceeds Expectations
For Q4, total net revenue rose 13% or 14% in constant currency to $3.6 billion, and excluding the 53rd week, net revenue increased 8% or 9% in constant currency.
Strong International Performance
China Mainland revenue increased 38% or 39% in constant currency with comparable sales increasing 27%. In the Rest of World, revenue grew by 22% or 26% in constant currency.
Product Innovation and Launches
Successful launches of new product lines like Glow Up, Daydrift, BeCalm, and the expansion of the Align franchise indicate strong product innovation.
Share Repurchase Program
In Q4, Lululemon repurchased $332 million of stock, bringing total repurchases in 2024 to $1.6 billion, reflecting confidence in long-term prospects.
Lowlights
Softening Traffic in the U.S.
The U.S. market experienced traffic declines attributed to a dynamic macro environment, which contributed to a cautious consumer.
FX and Tariff Headwinds Impact Margins
Foreign exchange and tariffs are expected to be a $0.30 to $0.35 drag on EPS in 2025, and gross margins are expected to decrease approximately 60 basis points.
Operating Margin Pressure
Operating margin for full year 2025 is expected to decrease by approximately 100 basis points due to FX headwinds, tariffs, and increased expenses.
Company Guidance
In the Lululemon Athletica Inc.'s fourth quarter and full-year 2024 financial results conference call, the company provided guidance for 2025, highlighting several key metrics. For the full year of 2025, Lululemon expects revenue to range between $11.15 billion and $11.3 billion, representing a growth of 7% to 8% when excluding the 53rd week. The company plans to open 40 to 45 net new stores, primarily in international markets, contributing to a 10% increase in square footage. Gross margins are anticipated to decrease by approximately 60 basis points due to factors such as foreign exchange headwinds and increased tariffs. SG&A expenses are expected to see a deleverage of 40 to 50 basis points as the company continues to invest in its Power of Three x2 roadmap. Operating margin is projected to decrease by 100 basis points compared to 2024. The effective tax rate is estimated at approximately 30%, and diluted earnings per share are expected to range from $14.95 to $15.15. Lululemon also plans capital expenditures of $740 million to $760 million to support business growth initiatives.Lululemon Athletica Corporate Events
Business Operations and StrategyFinancial Disclosures
Lululemon Projects Strong Q4 Fiscal 2024 Revenue Growth
Positive
Jan 13, 2025
Lululemon Athletica has revised its revenue and earnings expectations for the fourth quarter of fiscal 2024, projecting net revenue to reach between $3.560 billion to $3.580 billion, marking an 11% to 12% growth from the previous year. This adjustment, attributed to strong product reception during the holiday season, also anticipates an increase in gross margin and a slight improvement in expenses management, positioning the company favorably in the competitive athletic apparel market.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.