Athletic apparel and accessories retailer Lululemon Athletica, Inc. (LULU) has delivered a better-than-expected first-quarter performance on its top line and bottom line.
Revenue gained 31% year-over-year to $1.61 billion, outperforming estimates by $67.5 million. Earnings of $1.48 per share came in ahead of consensus by $0.05. Notably, comparable sales were up 28% during this period.
Management Weighs In
Lululemon CEO, Calvin McDonald, commented, “These results provide a solid foundation as we begin our next five-year journey and deliver against our new Power of Three ×2 growth plan. I want to thank our teams around the world for remaining agile and continuing to execute at a high level to achieve our goals, while successfully navigating the challenges within the macro environment.”
The company is aiming to double its revenue to $12.5 billion by 2026. Its “Power of Three ×2 growth plan” entails doubling men’s and digital revenue and quadrupling international revenue relative to 2021.
Looking ahead, for 2022, LULU expects revenue to be between $7.610 billion and $7.710 billion. This range implies a compounded three-year annual growth rate of about 24% to 25%. Further, earnings per share (EPS) are expected to range between $9.42 per share and $9.57 per share.
Analyst’s Take
B.Riley Financial’s Susan Anderson has reiterated a Buy rating on the stock while decreasing the price target to $440 from $487.
Overall, the Street has a Moderate Buy consensus rating on the stock based on 10 Buys, five Holds, and a Sell. The average Lululemon price target of $418.52 implies a potential upside of 38.32%. That’s after a 15.5% slide in the share price over the past month.
Closing Note
Despite supply chain and inflationary challenges, Lululemon has delivered impressive numbers. The continued business momentum should help the company hit its 2026 growth targets, which is a positive sign for investors.
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