Factors Likely to Influence Lululemon's (LULU) Earnings in Q4
lululemon athletica inc. LULU is likely to witness top and bottom-line growth when it reports fourth-quarter fiscal 2022 results on Mar 28, after market close.
The Zacks Consensus Estimate for fiscal fourth-quarter sales is pegged at $2.7 billion, indicating a 26.4% increase from the prior-year quarter's reported figure. The Zacks Consensus Estimate for the company's fiscal fourth-quarter earnings is pinned at $4.25, suggesting a 26.1% rise from the $3.37 reported in the year-ago quarter. Earnings estimates have moved up by a penny in the past 60 days.
For fiscal 2022, the Zacks Consensus Estimate is pegged at $8 billion, suggesting a 28.5% growth from the prior-year quarter’s reported figure. The Zacks Consensus Estimate for fiscal 2022 earnings indicate a 27.3% year-over-year growth to $9.92. We expect the company’s fiscal 2022 total revenues to increase 27.2% year over year to $7,959 million and the bottom line to increase 27% to $9.9 per share.
The company delivered an earnings surprise of 2% in the last reported quarter. LULU's bottom line beat estimates by 6.7%, on average, in the trailing four quarters.
lululemon athletica inc. Price and EPS Surprise
lululemon athletica inc. price-eps-surprise | lululemon athletica inc. Quote
Key Factors to Note
lululemon has been benefiting from continued business momentum, backed by a favorable response to its products. Improvement in store traffic, as consumers returned to stores for shopping, as well as solid online show, bodes well. The persistence of the trend is expected to have boosted the company’s top line in the to-be-reported quarter.
The company has been focused on investments to enhance the in-store experience. It has been leveraging its stores to facilitate omni-channel capabilities, including buy online pick up in store (BOPUS) and ship from store. It has been implementing several strategies to improve the guest experience and reduce wait time. These include virtual waitlist, mobile POS and appointment shopping. These functionalities enable reducing the time of waiting in line to enter the store, as well as allow customers to complete some transactions like returns, exchanges and purchase of gift cards without entering the store. Store expansion efforts are also expected to have acted as an upside.
lululemon has been gaining from improving online demand. Its accelerated e-commerce investments to ensure a robust shopping experience also bode well. It has been investing in developing sites, building transactional omni functionality and increasing fulfillment capabilities. Some notable efforts in this space include curbside pickups, same-day deliveries and BOPUS. It has been enhancing its mobile app in a bid to offer the curbside pickup service and train its store associates to help customers speed up transactions. Free online digital educator service for people who can't make it into stores also bodes well.
On the last reported quarter’s earnings call, management anticipated net revenues of $7.944-$7.994 billion for fiscal 2022. The revised view represents a three-year CAGR of 26%, suggesting a rise from the three-year revenue CAGR of 19% leading up to fiscal 2020. Lululemon anticipates GAAP EPS of $9.94-$10.04 for fiscal 2022 compared with $9.82-$9.97 stated earlier. Excluding the gain from the sale of an administrative office building, adjusted EPS for the fiscal year is envisioned to be $9.87-$9.97 compared with the $9.75-$9.90 mentioned earlier.
lululemon recently updated its fourth-quarter fiscal 2022 view, wherein the company expects revenues of $2.66-$2.7 billion, indicating 25-27% year-over-year growth, up from the previously stated $2.605-$2.655 billion. Adjusted earnings are envisioned to be $4.22-$4.27, up from the prior mentioned $4.20-$4.30. It also highlighted that the fiscal fourth-quarter traffic remained strong across both physical and digital channels. It anticipated delivering another quarter of solid earnings growth.
However, lululemon has been witnessing elevated costs and increased markdowns. Also, higher investments in the distribution center network and more normalized markdowns from the low levels witnessed in the prior year are expected to have hurt margins in fourth-quarter fiscal 2022. The company anticipates the fiscal fourth-quarter gross margin to contract 90-110 basis points (bps) compared with the earlier stated 10-20 bps expansion. For fiscal 2022, management envisions the gross margin to decline 100-140 bps mainly due to adverse currency rates.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for lululemon this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
lululemon has a Zacks Rank #3 and an Earnings ESP of 0.00%.
Stocks Poised to Beat Earnings Estimates
Here are some stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:
Roku, Inc. ROKU has an Earnings ESP of +0.10% and a Zacks Rank #3. ROKU is likely to register top and bottom-line growth when it reports fourth-quarter fiscal 2022 numbers. The Zacks Consensus Estimate for its quarterly revenues is pegged at $711.5 billion, suggesting a 3% decline from the figure reported in the prior-year quarter.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Roku’s fiscal fourth-quarter earnings is pegged at a loss of $1.48, suggesting a decrease of 679% from the year-ago quarter’s reported number. The consensus mark for the fiscal fourth quarter has moved down 1.4% in the past 30 days. ROKU has delivered a bottom-line beat of 5.2%, on average, in the trailing four quarters.
Whirlpool WHR currently has an Earnings ESP of +24.62% and a Zacks Rank of 3. The company is expected to register top and bottom-line declines when it reports first-quarter 2023 numbers. The Zacks Consensus Estimate for WHR’s quarterly revenues is pegged at $4.5 billion, which suggests a decline of 8.6% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for Whirlpool’s quarterly earnings has moved down 15% in the past 30 days to $1.99 per share. This suggests a decline of 62.5% from the year-ago quarter’s reported figure. WHR has delivered an earnings surprise of 4.1%, on average, in the trailing four quarters.
Mattel MAT currently has an Earnings ESP of +20.46% and a Zacks Rank #3. MAT is anticipated to register top and bottom-line declines when it reports first-quarter 2023 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $772.8 million, indicating a decline of 25.8% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Mattel’s loss of 12 cents per share has widened by 2 cents in the past 30 days. This suggests a significant decline from earnings of 8 cents reported in the prior-year quarter. MAT has delivered an earnings beat of 124.8%, on average, in the trailing four quarters.
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