Lululemon (LULU) Q1 Earnings & Revenues Beat On Improved Traffic

Ecommerce, Selling Online, Online Sales, E-Commerce

Lululemon athletica inc. LULU reported robust first-quarter fiscal 2021 results, with the top and bottom lines surpassing the Zacks Consensus Estimate as well as improving year over year. Strength across all segments contributed to growth, led by continued e-commerce expansion and rebound in in-store sales. Also, the company noted that all key metrics reflected marked improvements compared with the first quarter of fiscal 2019, which represents the pre-pandemic level.

Management notes that the strong business momentum has continued into the second quarter. Further, its financial position keeps it on track to deliver on its Power of Three growth strategy. Consequently, this Zacks Rank #3 (Hold) company provided expectations for the second quarter and raised its view for fiscal 2021.

We note that shares of the company have gained 8.2% in the past three months compared with the industry’s 6.4% growth.

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Q1 Numbers

Lululemon’s adjusted earnings of $1.16 per share in the fiscal first quarter beat the Zacks Consensus Estimate of 91 cents and increased substantially from earnings of 23 cents in the year-ago quarter.

The Vancouver, Canada-based company’s quarterly revenues advanced 88% year over year to $1,226.5 million and surpassed the Zacks Consensus Estimate of $1,117 million. On a constant-dollar basis, revenues increased 83%. Top-line growth was driven by strength across all categories, channels and geographies. A rebound in brick-and-mortar stores, driven by improved footfall as consumers moved out to stores for their shopping needs, aided sales growth. Also, continued expansion in the e-commerce channel was a key driver.

Compared with the first quarter of fiscal 2019, earnings per share were up 56.8% from 74 cents, while net revenues improved 57%. On a two-year compounded annual growth rate basis, revenues rose 25%.

Lululemon athletica inc. Price, Consensus and EPS Surprise

lululemon athletica inc. price-consensus-eps-surprise-chart | lululemon athletica inc. Quote

In the reported quarter, revenues at company-operated stores advanced 106% to $536.6 million. Direct-to-consumer sales rose 55% to 545.1 million and were up 50% in constant currency. Direct-to-consumer revenues represented 44.4% of the company’s total revenues compared with 54% in first-quarter fiscal 2020. Additionally, management pointed out that in-store productivity improved 88% from the comparable fiscal 2019 levels.

In the digital channel, revenues increased 61%, on a two-year CAGR basis, benefiting from strength in traffic and conversions. The company has been witnessing robust traffic trends, driven by both new and existing guests, while conversion continues to gain from positive customer responses for its enhancements on the e-commerce sites and mobile app.

Moreover, it witnessed growth of 82% in North America and 125% in international markets.

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