Lululemon Athletica Stock Forecast: After another earnings beat, can LULU defy macro gravity?

And they have done it again! Lululemon Athletica (LULU) burst out of its shell to advance 10% in Thursday's extended trade after the athleisure brand showed the market that higher inflation and a beseiged consumer were no match for its premium pricing power and innovation.

LULU stock is up 9.8% in Friday's premarket at $323.28 after shedding 1.8% to close at $294.45 on Thursday.

Lululemon earnings news

Lululemon reported fiscal Q2 GAAP earnings per share (EPS) of $2.26 on revenue of $1.87 billion. The earnings figure was 39 cents ahead of consensus or 21%. Revenue came in $100 million ahead of expectations and 5.6% above consensus.

The retailer opened 21 net new stores during the quarter and now has a total of 600 worldwide. Online sales also grew 30% YoY and now account for almost half of total revenue.

"Overall momentum in our international business remains strong, with revenue increasing 35% versus last year and 40% on a three-year CAGR basis," said Lululemon CEO Calvin McDonald. "In China, after a slower start to the year given COVID-19-related closures and capacity constraints, we have seen a rebound in the region. Revenue grew over 30% versus last year, and we saw a nearly 70% increase on a three-year CAGR basis. We remain in the early innings of growth in China."

Lululemon's gross profit margin of 56.5% was 40 basis points ahead of consensus, and the operating margin of 21.5% was 30 basis points higher YoY. These data points showed investors that Lululemon is dealing with inflation head-on and actually beating it, which very few clothing brand competitors have been successful at this year.

Same-store sales were up 23% YoY, which may have something to do with fewer covid worries but also showcases Lululemon's stranglehold on consumers despite the inflationary environment.

Management boosted LULU stock prospects by offering up healthy guidance for Q3. Revenue guidance was given a narrow band between $1.78 billion and $1.805 billion, and EPS between $1.90 and $1.95 was also better than expectations. This would mean 23% YoY revenue growth and 19% YoY EPS growth.

Lululemon stock forecast

LULU stock's surge in the premarket puts it slightly above the descending top trendline that has been in place since last autumn. To confirm this, LULU share price will need to also surmount the range high from mid-August at $335.71. This will allow bulls to take a much more ambitious aim at the $393 resistance level that held up in April.

Most stocks at the moment are entirely trading based on marketwide sentiment. We are all macro traders now, and it is yet to be decided if LULU's internal company success and outmatch the general negativity coming from the Fed and monthly inflation readings. The focus is now on the US employment report, with a general bullish response from the stock market, further reaction to that will determine much of how LULU stock trades over the next week.

LULU weekly chart