Lululemon LULU is set to report its first quarter fiscal 2020 financial results after the closing bell on Thursday, June 11. Shares of LULU have skyrocketed over the last few months despite the fact that many of its stores were closed due to the coronavirus.
Lululemon & the Pandemic
Lululemon in mid-March closed a “majority of” its stores “globally outside of Greater China” as part of the closure of countless businesses deemed non-essential. Lulu, like many other retail businesses from Apple AAPL to restaurants, continued to run its e-commerce business.
LULU then announced on May 21 that it was in the process of “gradually welcoming guests back to select locations where it is permitted to do so.” The athleisure retailer had already reopened in Greater China and is currently working to reopen “market-by-market in accordance with local government and public health authority guidelines.”
Lululemon said at the time that it had already reopened “over 150 store locations across North America, Europe, Asia, New Zealand and Australia,” which is where a majority of its nearly 500 (as of the end Q4) stores are located. The company said at the time that it was planning on opening roughly 200 additional locations “over the next two weeks.”
Despite the closings and the uncertainty, LULU stock is up 130% since March 16 to crush stay-at-home stars such as Zoom ZM, Amazon AMZN, and Netflix NFLX. Lululemon is now up 40% in 2020 and roughly 90% in the past 12 months.
Investors can also see that LULU has easily surpassed Nike NKE and Adidas ADDYY in the past two years, as part of much larger and longer run. And LULU hit new highs on Wednesday, up over 2% through late afternoon trading.
Our current Zacks estimates call for LULU’s sales for the three-month period ended in early May to sink -9.6% from the year-ago period to $707.5 million. This would mark its first year-over-year revenue decline since Q4 of 2009 and represent a sharp drop from recent periods of 20% sales expansion.
LULU’s adjusted first quarter earnings are also projected to plummet 62% to $0.28 per share. However, Lulu’s full-year fiscal 2020 revenue is still projected to pop 3.2%, with FY21 expected to surge over 23% above our current year estimate. Meanwhile, its adjusted FY20 EPS figure is projected to slip 9%, with FY21 expected to surge 37% higher.
Given its Q1 outlook, Wall Street has clearly proven it’s willing to look beyond Lululemon’s projected near-term setbacks as investors continue to bet on LULU’s longer-term growth within a booming industry that has seen everyone from Gap GPS to Target TGT try to emulate its offerings.
Lululemon’s mixed earnings revision activity helps it hold a Zacks Rank #3 (Hold) heading into its earnings release. LULU stock might face a post-earnings pullback no matter what its numbers say as investors take home some profits. That said, longer-term investors who were previously afraid to buy near its highs might have missed out on LULU’s massive run over the last three years, up over 500%.
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