LULU Stock: Why It Is Trading Higher Today

By Amit Chowdhry ● Sep 9, 2021
  • The stock price of Lululemon Athletica Inc (NASDAQ: LULU) is trading at over 10% pre-market this morning. This is why it happened.

The stock price of Lululemon Athletica Inc (NASDAQ: LULU) is trading at over 10% pre-market this morning. Investors are responding positively to the company’s financial results for the second quarter of fiscal 2021.

For the second quarter of 2021, compared to the second quarter of 2020:

— Net revenue increased 61% to $1.5 billion. On a constant dollar basis, net revenue increased 56%.

— Company-operated stores net revenue increased 142% to $695.1 million.

— Direct to consumer net revenue increased 8% to $597.4 million. On a constant dollar basis, direct to consumer net revenue increased 4%.

— Net revenue increased 63% in North America, and increased 49% internationally.

— Direct to consumer net revenue represented 41.2% of total net revenue compared to 61.4% for the second quarter of 2020.

— Gross profit increased 72% to $842.7 million and gross margin increased 390 basis points to 58.1%.

— Income from operations increased 134% to $291.0 million. Adjusted income from operations increased 120% to $299.2 million.

— Operating margin increased 630 basis points to 20.1%. Adjusted operating margin increased 560 basis points to 20.6%.

— Income tax expense increased 123% to $83.1 million. The effective tax rate for the second quarter of 2021 was 28.5% compared to 30% for the second quarter of 2020. The adjusted effective tax rate was 27.9% for the second quarter of 2021 compared to 28.9% for the second quarter of 2020.

— Diluted earnings per share were $1.59 compared to $0.66 in the second quarter of 2020. Adjusted diluted earnings per share were $1.65 compared to $0.74 in the second quarter of 2020.

— Lululemon Athletica repurchased 0.5 million shares of its own common stock at an average price of $338.41 per share for a total cost of $171.1 million.

— Lululemon Athletica opened 11 new company-operated stores during the second quarter, ending with 534 stores.

For the second quarter of 2021, compared to the second quarter of 2019:

— Net revenue increased by $567.3 million, or 64%, representing a two-year compound annual growth rate of 28%.

— Gross margin increased 310 basis points.

— Operating margin increased 110 basis points. Adjusted operating margin increased 160 basis points.

— Diluted earnings per share were $1.59 compared to $0.96 in the second quarter of 2019. Adjusted diluted earnings per share were $1.65 in the second quarter of 2021.

2021 Outlook

For the third quarter of 2021, the company expects net revenue to be in the range of $1.4 billion to $1.43 billion. And the diluted earnings per share are expected to be in the range of $1.28 to $1.33 for the quarter and adjusted diluted earnings per share are expected to be in the range of $1.33 to $1.38.

For 2021, the company expects net revenue to be in the range of $6.190 billion to $6.260 billion. And diluted earnings per share are expected to be in the range of $7.16 to $7.26 for the year and adjusted diluted earnings per share are expected to be in the range of $7.38 to $7.48.

KEY QUOTES:

“Our second quarter results demonstrate the continued momentum across the business, and how we are living into our Power of Three growth plan and Impact Agenda commitments. We launched exciting new products, experienced strength across channels and geographies, and announced new partnerships that will allow us to become a leader in product sustainability.” McDonald continued: “I’m inspired every day by our teams around the world for their continued enthusiasm, agility, and commitment to the brand.”

— Calvin McDonald, Chief Executive Officer

“Our performance in Q2 was driven by a strong response to our product offering, improving productivity in our stores, and sustained strength in e-commerce. While we continue to navigate the COVID-19 environment, including supply chain headwinds, I’m excited with our momentum as we head into the second half of the year and pleased to be able to increase our guidance. I too would like to thank the teams across the globe for enabling our solid financial performance.”

— Meghan Frank, Chief Financial Officer

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.