lululemon Q3 Results Top Estimates; Street Says Buy

Athletic apparel retailer lululemon athletica inc. (LULU) has reported better-than-expected results for the third quarter of Fiscal Year 2021. The upbeat results can be attributed primarily to the growth witnessed in net revenues.

Following the release, shares of the company declined 1.2% to close at $411.99 in Thursday’s extended trading session, but the fall can be attributed to wider market concerns.

Revenue & Earnings

lululemon reported quarterly net revenues of $1.5 billion, up 30% year-over-year. Moreover, the figure topped the consensus estimate of $1.43 billion. The robust growth witnessed in net revenues was driven by 32% and 23% year-over-year growth in comparable store sales and direct to consumer net revenue, respectively.

Meanwhile, the company has reported quarterly earnings per share (EPS) of $1.62, which denotes a growth of 39.7% from the prior year. Further, the figure surpassed the consensus estimate of $1.41 per share.

Other Operating Metrics

In the third quarter, the company’s gross margins increased by 110 basis points from the prior year to 57.2%.

The company opened 18 net new company-operated stores during the third quarter. Its store count at the end of the quarter stood at 552.


The company has also provided guidance for the fourth quarter. LULU expects to post earnings in the range of $3.25 per share to $3.32 per share against the consensus estimate of $3.30 per share.

Further, it expects net revenue to be in the range of $2.125 billion to $2.165 billion for the fourth quarter. The consensus estimate for the same is pegged at $2.17 billion.

Management Commentary

The CEO of lululemon, Calvin McDonald, said, “Our third quarter results demonstrate the ongoing strength of lululemon and the tremendous growth potential of the business in both the near- and long-term. We are pleased with our early holiday season performance and how the lululemon brand continues to resonate in markets around the world.”

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Price Target

Recently, Cowen & Co. analyst John Kernan reiterated a Buy rating on the stock. The analyst, however, lowered the price target from $520 to $515, which implies upside potential of 23.5% from current levels.

Consensus among analysts is a Strong Buy based on 12 Buys and 3 Holds. The average lululemon price target of $488.33 implies upside potential of 17.1% from current levels. Shares have gained 13% over the past year.

Website Traffic

TipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (SEMR), the world’s biggest website usage monitoring service, offers insight into lululemon’s performance this quarter.

According to the tool, the lululemon website recorded a 21.34% monthly fall in global visits in November, compared to the same period last year. Further, year-to-date, website traffic has declined 4.26%, compared to the previous year.

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