Making sense of market moves
Stay up to date on the latest market news with daily analysis of the investing landscape, served up Brew-style.
The yoga pants brand worn by whoever coined the Spotify genre “Pink Pilates Princess Strut Pop” had a stellar quarter.
Lululemon shares rose over 15% today after the athleisure apparel retailer revealed a strong third quarter, pushing the stock to its best day of trading since 2018.
Highlights from Lululemon’s earnings announcement include:
- Earnings per share of $2.87, nearly 7% higher than the $2.69 analysts expected.
- Sales jumped to $2.40 billion, a 9% increase year over year.
- The firm projects revenue will land somewhere between $3.48 billion and $3.51 billion for the fourth quarter and holiday season, 8%-to-10% higher than the year prior.
- Lululemon raised its full-year guidance, too: Revenue will hit somewhere between $10.45 billion and $10.49 billion, above previous guidance of $10.38 billion to $10.48 billion.
But despite that red omega logo being unavoidable at SoulCycle and Equinox locations across the nation, comparable stores sales in the US actually decreased 2% last quarter. International consumers were the ones picking up the slack: Same store sales outside the US rose an impressive 25%. Revenue also lagged 2% domestically, but leapt 33% abroad.
Turning lemons into Lululemonade
Last quarter’s sales jump proved to investors that the apparel giant is making a solid recovery from a rough Q2.
On top of a broader consumer slowdown, Lululemon suffered from some self-inflicted wounds over the past year. It badly bungled a rollout of see-through pants that customers rejected en masse, and failed to offer a full range of colors and styles on popular products, contributing its first revenue miss in two years last quarter. The result is that the stock is still down over 20% in 2024.
But CEO Calvin McDonald assured investors that the company was back on track on the firm’s earning call. “Our teams have been agile and have been chasing into seasonal colors, prints and patterns,” he explained.
Analysts are optimistic about the stock, too. Morgan Stanley retail analyst Alex Straton raised her price target to $414 from its previous $345 today, and wrote that “the 3Q beat and FY guidance raise left little for the bears to point to, with US growth stabilizing, women’s and China accelerating, as well as promotional and discounting fears proving overblown.”
Whether you love hot barre, hate it, or hope to never find out what it is, you don’t need to be a pink pilates princess to invest in LULU.—LB