lululemon athletica Earnings Preview (66.69 +0.33)
lululemon athletica (LULU) is set to report Q3 earnings after the market closes today (the co reported at 16:05 last quarter) with a conference call to follow at 4:30 PM ET. Current Capital IQ estimates Q3 diluted EPS of $0.52 (vs $0.47 last year) on revs +12% Y/Y to $610 mln. Estimates for total comps is +5.2%
The Co typically provides guidance for the next quarter and FY in the press release.
Current Cap IQ estimates Q4 EPS of $1.17 on revs +10% Y/Y to $866 mln
Current Estimates are for comps of 4.3%
Last quarter the co reported beat on both EPS and revs and provided upside guidance.
Direct to consumer net revenue (e-commerce) +29% or 16% excluding impact of warehouse sale
Q3 Guidance: EPS of $0.50-0.52, excluding non-recurring items, on Revs of $605-615 mln.
Expects Q3 comps increase of mid single digit range ex-fx
FY 18 Guidance: EPS of $2.35-2.42, excluding ivivva restructuring impact
Expects comps to increase in the lsd range on a constant dollar basis
Expects revs of $2.545-2.595 bln
Comps increase in the low single-digit range on a constant dollar basis
Musings on LULU before the report
LULU has had a pretty up and down year. Investors were not very pleased w/ its Q4 report from 2016 as shares fell 24%. Shares eventually reached 52-week lows at around 47.26 on May 31, a couple days before Q1s report. Since then, LULU shares have been slowly filling that gigantic gap and are currently trading at around where LULU was trading before the huge drop.
During its Q2 call, mgmt. spoke about the acceleration the co's business was seeing from the initiatives that were undertaken/announced during the Q1 report (see LULU's Q2 earnings preview for a more in-depth look into those initiatives).
Conclusion: Q2 was an impressive report and hinted that mgmt's initiatives/new products have reignited momentum in the co's business. The stock beat estimates and posted a gross margin of 51.2%. Despite the report, investors did not seem too sold on the comeback story as shares continued trading up and down throughout the quarter before breaking through $64 resistance on November 10. Investors are no doubt scared of another gap down happening due to poor earnings from the co as volume has essentially dried up heading into the report.
Slower/bigger institutional funds may need another strong report before becoming believers again in the story though. Thus, this quarter is starting to shape-up as a prove-it/confirmation quarter of sorts as investors will be looking to see if the acceleration of momentum carried over into Q3