Lululemon shares hit all-time excessive after monster earnings report

Pedestrians seen strolling previous Canadian athletic attire retailer Lululemon in Shanghai.

Alex Tai | SOPA Pictures | LightRocket | Getty Pictures

Lululemon shares broke an all-time excessive Thursday after the retailer blew previous Wall Avenue’s expectations in its newest fiscal quarter and mentioned it is on observe to hit a 2023 income goal nicely forward of schedule.

The athletic attire maker’s inventory closed the day up 10.5%, and at one level reached a file intraday excessive of $434.22. Shares had final reached an intraday excessive of $417.85 on Aug. 30. Lululemon has gained about 21% 12 months so far, bringing its market worth to nearly $54.eight billion.

Well-known for its girls’s leggings and “ABC” jogger pants for males, Lululemon’s gross sales have outperformed these of different retailers through the Covid pandemic. Customers have been looking for snug clothes to put on whereas working from residence and when exercising. Buyers have spent more cash on so-called athleisure types than clothes, fits and different formal put on.

The corporate — and the style pattern — stands to profit whilst customers are rising from their houses and returning to colleges and places of work.

For its present fiscal 12 months, Lululemon expects income to vary between $6.19 billion and $6.26 billion, that means it would surpass a key monetary aim roughly two years forward of schedule.

Chief Govt Calvin McDonald instructed analysts on an earrings convention name that the retailer will even double its males’s enterprise and quadruple its worldwide section sooner than anticipated. It plans to supply new, long-term monetary targets after the 2021 holidays.

McDonald added that Lululemon could be performing “even stronger,” if it weren’t for the supply-chain complications going through the retail business at present.

“Gross sales within the quarter in all probability might have been even stronger if we weren’t having to face a few of these disruptions,” the CEO instructed CNBC’s “Squawk Field” on Thursday morning.

Cowen & Co. hiked its value goal for Lululemon inventory to $520 a share from $476, marking a brand new excessive on Wall Avenue.

In line with Cowen retail analyst John Kernan, “Administration expressed important confidence within the tempo of its enterprise and being within the early innings of its progress potential throughout product strains, actions, classes and areas.”

On the heels of Lululemon’s upbeat quarterly outcomes, Telsey Advisory Group additionally raised its value goal on Lululemon inventory to $485 from $460. The common value goal for Lululemon’s inventory is now $434.20, based on FactSet.

Whereas supply-chain disruptions together with heightened air-freight prices and manufacturing unit closures in Vietnam stay headwinds, Lululemon has taken these elements under consideration in its up to date outlook, Telsey’s Dana Telsey mentioned in a be aware to shoppers.

“The pandemic has accelerated Lululemon’s strategic initiatives and the corporate seems well-positioned to additional capitalize on alternatives in a post-pandemic world,” she mentioned.

Lululemon, which additionally owns the linked health product Mirror, hopes to maintain driving progress by launching merchandise in new materials, a few of that are environmentally pleasant. It is nonetheless eyeing higher positive factors in its males’s enterprise and in key worldwide markets like China.

There have additionally been rumors that Lululemon will launch into footwear subsequent 12 months, making it a more in-depth competitor to Nike and Adidas.

“What has been accelerated is the curiosity in well-being … in purposeful attire. And that’s the candy spot of the model,” McDonald instructed CNBC.

To make certain, the athletic attire house is just getting extra aggressive. Levi Strauss & Co. just lately introduced its plans to accumulate the yoga attire maker Past Yoga. And Wolverine Worldwide — the corporate behind shoe names together with Merrell, Saucony, Sperry and Stride Ceremony — just lately scooped up Lululemon rival model Sweaty Betty for $410 million.

—CNBC’s Michael Bloom contributed to this reporting.

Leave a Reply

Your email address will not be published. Required fields are marked *