|

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

  • Lululemon Athletica stock soared 10% after fiscal Q2 earnings, revenue beat.
  • Wall Street expected EPS of $1.87 on revenue of $1.77 billion.
  • LULU reported FQ2 EPS of $2.26 on $1.87 billion in sales.

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 stock price chart after earnings release

LULU weekly chart

Author

Clay Webster

Clay Webster

FXStreet

Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.

More from Clay Webster
Share:

Editor's Picks

AUD/USD holds firm near 0.7000 after Chinese inflation, trade data

AUD/USD stays firm near 0.7000 in Wednesday’s Asian session, picking up some bids after China's mixed inflation and upbeat trade data. CPI rose less than expected in September, while PPI inflation picked up. Meanwhile, the Chinese trade surplus unexpectedly widened in September. The pair remains underpinned by a broadly subdued US Dollar, despite the Middle East escalation, as focus remains on US CPI data.

USD/JPY consolidates near 158.50; looks to US CPI for fresh impetus

USD/JPY stays range-bound near 158.50 in the Asian session on Wednesday, with looming intervention risks supporting the Japanese Yen and capping upside amid a softer US Dollar. However, geopolitical uncertainties act as a tailwind for the safe-haven USD and the pair. Traders also seem hesitant ahead of the release of the latest US inflation figures.

Gold looks to $4100 and US CPI inflation amid geopolitical risks

Gold falls for the third straight day on Wednesday, as the recent recovery falters ahead of US inflation. US Dollar pauses correction amid rising Oil prices and stabilizing US Treasury bond yields. The daily bearish RSI remains a headwind for Gold buyers, with $4,100 seen at risk.

Bitcoin eyes $85,000; ETH holds support, XRP stabilizes
Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) show signs of recovery on Wednesday as buyers try to regain control after their recent market weakness. BTC extends its rebound toward the $85,000 resistance, while ETH and XRP find support around key levels.
What happens after a US Treasury market crash
The global bond market is under severe pressure as US Treasury yields reach multi-decade highs, driven by persistent inflation risk, heavy government and corporate debt issuance, and expanding term premiums. Higher yields raise borrowing costs and tighten financial conditions, but a severe bond selloff can ultimately shift investor focus from inflation to growth and financial stability.
Has Bitcoin really escaped the macro forces it was built to fight?
Over 17 years ago, Satoshi Nakamoto designed Bitcoin (BTC) on the back of a global financial crisis as an alternative to the global monetary system outside the control of central banks, governments and traditional intermediaries. This raises a key question: has Bitcoin really become independent of the macroeconomic forces it was built to challenge?