Lululemon Athletica Stock News: LULU drained nearly 16% on trimmed sales outlook
- Lululemon Athletica plunges below $400 for first time in five months.
- Full-year guidance cut to $250 million below consensus.
- LULU stock halts fall near long-time support of $386.50.
- Q4 earnings and revenue arrive above consensus.
Wall Street favorite Lululemon Athletica (LULU) stock took a punch to the gut on Friday after management's 2024 revenue outlook underwhelmed analysts. The athleisure stock fell more than 18% at one point to $387, dropping below $400 for the first time since last November. However, LULU stock recovered somewhat to $403.19, down 15.8%, by the close close.
Call it a case of expectations getting too far ahead of the curve. Lululemon beat consensus forecasts for the fourth quarter, but that just wasn’t enough to satisfy traders.
The market opened slightly lower on Friday as it digested the previous two days of gains following Federal Reserve Chair Jerome Powell’s press conference in which he remained committed to cutting interest rates this year despite recent hints of inflation in the US economy. The NASDAQ closed up 0.16%, while the S&P 500 lost 0.14% and the Dow Jones receded 0.77%.
Nike (NKE) stock also sank 7% following earnings as the athletic brand pivoted to more innovative designs and said it will return to pushing its wholesale segment.
Lululemon Athletica stock news
The major factor in Friday’s sell-off was that the athleisure brand’s management released their 2024 full-year sales outlook. It came in a range from $10.7 billion to $10.8 billion, which was well below the $11 billion consensus from Wall Street analysts.
For the current quarter, Q1, management said sales would reach $2.18 to $2.2 billion, which was likewise below the $2.26 billion consensus. Essentially, this means that revenue is staying largely flat from recent quarters in mid-2023, but the guidance would still outflank Q1 2023 (fiscal Q1 2024) by about 9%.
Lululemon opened 25 new stores during the fourth quarter, which ended in December, and ended the period with a total of 711 stores.
In the fourth quarter, Lululemon earned $5.29 in GAAP earnings per share, which beat consensus by more than 5%. Revenue of $3.21 billion rose 16% YoY, besting consensus by a slight $10 million.
The rise in sales during Q4 was largely attributed to a 54% increase in international revenue. Overall, same store sales rose 12% YoY in the fourth quarter.
Another positive detail was management's guidance for the full year. The range was given for $14.00 to $15.20 in GAAP EPS, which overtakes existing consensus of $14.26.
Other good statistics involved Lululemon's margins. Gross margins rose from 55% to 59% YoY, but selling, general & administrative (SG&A) costs rose from 29% of revenue to 31%.
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Lululemon stock forecast
LULU stock halted its sell-off at an intraday low on Friday of $387.11. That is a good sign for worried shareholders and also seems to have beckoned bulls to enter there as the price rebounded off that low. This is because the $386.50 support/resistance level has featured in the price action about a dozen times since December 2022.
LULU daily stock chart
Author
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.
