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Workout clothing manufacturer Lululemon (LULU) topped fourth-quarter estimates, but gave mixed guidance for the full year on Tuesday night. LULU stock fell.
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Gains Lululemon
Estimates: Analysts expect EPS of $ 2.49, 9% above last year’s quarter, on revenue of $ 1.66 billion, a 19% increase from last year, according to Zacks Investment Research.
Comparable sales are expected to increase 10.1%, or 11.4% at constant exchange rates, according to Consensus Metrix.
Results: EPS of $ 2.58 on revenue of $ 1.73 billion, as direct net income to consumers climbed 94%. Comparable sales increased 21%, or 20% in constant dollars. But the adjusted operating margin fell 290 basis points to 26.9%.
OutlookQ1 EPS 86-90 cents, above consensus at 84 cents, on revenue of $ 1.1 to $ 1.13 billion, above consensus of $ 1.01 billion. Annual EPS of $ 6.30- $ 6.45, below consensus for $ 6.65, on revenue of $ 5.55-5.65 billion, above views for 5.41 billions of dollars.
Also last quarter, Lululemon began selling home exercise equipment maker Mirror for $ 1,500 in 18 stores and on its website. He bought the startup for $ 500 million in 2020.
The mirror competes with Platoon Interactive exercise bikes from (PTON), as well as Apples (AAPL) Fitness + app. Nike (NKE) has also grown into home fitness as its clothing competes with Lululemon’s.
China could also become a bigger market for Lululemon, according to Landon Luxembourg, senior analyst at Third Bridge.
“Lululemon has been investing in the Chinese market for several years, they have a small base compared to Adidas and Nike, but they have built a community network which is effective in stimulating consumer acquisition,” he said.
“The Chinese sportswear market has recently undergone a huge transition with a big push to improve the physical fitness of the people and many government investments in sports facilities.”
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LULU action
Shares fell 0.8% late after closing 0.3% higher at 317.09 on the stock market today. LULU stock has a buy point of 387.47 after a long consolidation, according to MarketSmith chart analysis.
Lululemon’s line of relative strength is trending upward. The stock has a strong EPS rating of 86 as it attempts to build on a return to profitability in the third quarter after two consecutive quarters of losses.
As the economy reopens, retailers like Lululemon face supply chain issues from port congestion and container shortages. Transportation congestion caused by the blockade of the Suez Canal last week can also cause ripples among suppliers.
Nike reported mixed results in the third quarter of its fiscal year earlier this month. Revenue in North America fell 10% to $ 3.56 billion due to supply chain challenges, including global container shortages and US port congestion.
Meanwhile, Peloton could also be an emerging competitor in the apparel business, as it recently partnered with German athletic equipment giant. Adidas (ADD).
Please follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
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