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Lululemon Earnings Preview: Will There Be Growth?

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Lululemon Earnings Preview: Will There Be Growth?
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Shares of Lululemon Athletica inc. (NASDAQ: LULU) were down more than 3 percent on Monday, ahead of the company’s first quarter financial results, scheduled for Tuesday morning.

The company’s earnings respond to a cycle, peaking in the fourth quarter each year, before falling substantially in the first quarter. While comparing the current estimates with last quarter’s results may make little sense, contrasting with the ones reported in the same quarter last year does make some sense.

In the first quarter of 2014, Lululemon registered earnings of $0.34 per share on revenue of $384.6 million. For the first quarter of 2015, the Street is projecting flat year-over-year earnings of $0.34 per share on slightly higher revenue of $417.57 million. The crowd is projecting earnings of $0.35 per share on revenue of $420.73 million.

However, both these estimates stand above the management’s guidance of $0.32 per share in earnings and $415.5 million in revenue.

It is also interesting to see how sentiment has evolved over time. Both the Street’s and the crowd’s consensus fell considerably over March, before establishing at current levels.

Related Link: Stifel's Thoughts Ahead Of Lululemon's Q1 Earnings (And A Possible Short Squeeze)

What Analysts Are Saying

In a recent report, analysts at Stifel provided a preview of Lululemon’s earnings. According to the note, the firm expects results in line with guidance of $0.32 per share, which had been initially considered conservative. Revenue is expected to come in somewhere between $415.5 million and $421.42 million.

“Given retailer 1Q results referencing weather, soft traffic trends, and port challenges, we expect inline results will be accepted as adequate (constant currency combined comp up only low-single digits with retail comps down low-single digits and gross margin within the guided range of 49%-50%),” the analysts said.

Latest Ratings for LULU

DateFirmActionFromTo
Feb 2017KeyBancDowngradesOverweightSector Weight
Feb 2017Goldman SachsUpgradesSellNeutral
Jan 2017CLSAInitiates Coverage OnUnderperform

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