Athletic apparel retailer Lululemon (NASDAQ:LULU) will be announcing earnings results this Thursday after the bell. Here’s what investors should know.
Lululemon beat analysts’ revenue expectations last quarter, reporting revenues of $2.47 billion, up 4.3% year on year. It was a softer quarter for the company, with EPS guidance for next quarter missing analysts’ expectations significantly and full-year revenue guidance missing analysts’ expectations.
Is Lululemon a buy or sell going into earnings? Read our full analysis here, it’s free for active Edge members.
This quarter, the market is expecting Lululemon’s revenue to decline 2.7% year on year, a reversal from the 6.5% increase it recorded in the same quarter last year.
Analysts covering the company have generally reconfirmed their estimates over the last 30 days, suggesting they anticipate the business will stay the course heading into earnings. Lululemon has missed Wall Street’s revenue estimates multiple times over the last two years.
Looking at Lululemon’s peers in the apparel retailer segment, some have already reported their Q2 results, giving us a hint as to what we can expect. Abercrombie and Fitch delivered year-on-year revenue growth of 4.8%, beating analysts’ expectations by 1.8%, and Gap reported a revenue decline of 2%, falling short of estimates by 0.9%. Abercrombie and Fitch traded up 33.8% following the results while Gap was also up 12.9%.
Read our full analysis of Abercrombie and Fitch’s results here and Gap’s results here.
Over the past year, investors have repeatedly shifted their focus from one macro narrative to another (AI disruption and AI capex spending to geopolitics, interest rates, and the broader health of the economy). While some of the apparel retailer stocks have shown solid performance in this choppy environment, the group has generally underperformed, with share prices down 3.5% on average over the last month. Lululemon is down 4.5% during the same time and is heading into earnings with an average analyst price target of $127.35 (compared to the current share price of $118.07).
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