Lululemon Q1 results: it’s a ‘very strong brand’

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Lululemon Q1 results: it’s a ‘very strong brand’

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By:

Wajeeh Khan

on
Jun 2, 2022

Lululemon Athletica Inc reports strong results for its fiscal first quarter.

Analyst says Lulu can withstand a modest slowdown in consumer spending.

Shares of the athletic apparel retailer are up 2.0% in after-hours trading.

Shares of Lululemon Athletica Inc (NASDAQ: LULU) are up 2.0% in extended trading after the athletic apparel retailer reported better-than-expected results for its fiscal first quarter in the face of inflationary pressure, supply constraints, and the after-effects of the COVID pandemic.

What Lululemon Q1 earnings report tells us

Earned $189.9 million in Q1 versus the year-ago figure of $144.9 million.Per-share earnings of $1.48 were much better than last year’s $1.11.Revenue jumped 32% to $1.60 billion, as per the earnings press release.FactSet consensus was for $1.43 of EPS on $1.55 billion in revenue.Comparable store sales were up 24% in the recent financial quarter.

Direct-to-consumer revenue went up 32% in fiscal Q1 and operating margin added 30 basis points to print at 16.1%. The stock is still down roughly 25% from its year-to-date high in April.


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Oppenheimer analyst’s remarks on Lululemon Athletica

With an addition of five net new stores in Q1, Lululemon Athletica now has 579 stores in total. Its strong quarterly results confirmed that the wealthier U.S. consumers were still spending. On CNBC’s “Closing Bell”, Brian Nagel said:

Stock’s been weak, but that weakness and near-term choppiness, is a very strong brand. A company that’s developing well in its core markets and overseas. It has a very committed consumer base that’s willing to pay.

The Oppenheimer analyst doesn’t see a “modest” slowdown in consumer spending as much of a threat for Lululemon. An all-out recession, however, could be a different story, he agreed.

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