Lululemon Athletica Stock (LULU): Should I Buy It Now?

By Amit Chowdhry ● June 15, 2020
  • Should you buy Lululemon Athletica Inc (NASDAQ: LULU) now? Here is some information to help you decide.

Lululemon Athletica Inc (NASDAQ: LULU) is known for engaging in the designing, distributing, and retail of athletic apparel and accessories. And Lululemon distributes its products through company-operated stores and a direct-to-consumer model.

Quarterly Earnings

Last week, Lululemon Athletica Inc (NASDAQ: LULU) reported its fiscal first-quarter earnings of 22 cents on revenue of $651.96 million, a drop of about 17% year-over-year. Following the earnings report, Lululemon’s stock price had dropped since the reported revenue had fallen short of expectations. And the doubling of online e-commerce was not enough to keep up with the closing of its shuttered stores.

Lululemon’s online sales had jumped about 70% in the quarter ended May 3 excluding currency impacts. And due to the COVID-19 pandemic, Lululemon withdrew its outlook.

The company’s executives said during the call that improvements will be gradual. But the earnings per share likely will not growth until the fourth quarter.

During the stay at home orders, Lululemon rolled out a digital educator program in order to make recommendations to online shoppers through video chat. In April alone, online sales had jumped 125%.

For the quarter, Lululemon had actually generated a net profit though. The net income hit $29 million compared to $97 million a year earlier. This was a pleasant surprise since many of the company’s rivals saw major losses due to the pandemic.

As of June 10, Lululemon had reopened 295 out of 489 total stores, including all of the ones in mainland China. And by the end of the month, nearly all of the stores are expected to be reopened.

As of the end of the quarter, Lululemon had cash and cash equivalents of $823 million. And the company had $398.2 million undrawn through its revolving credit facility.

Lululemon Athletica Inc Stock Performance – (NASDAQ: LULU) as of 06/15/2020 afternoon:

5 day: Down about 5%

1 month: Up about 16.84%

3 month: Up about 96.95%

6 month: Up about 31.9%

YTD: Up about 27.3%

1 year: Up about 68.2%

2 year: Up about 131.5%

5 year: Up about 350.4%

Max (since July 2007 IPO date): Up about 1,749.6%

Should You Buy Lululemon Athletica Inc (NASDAQ: LULU) Now?

Personally, I’m bullish on Lululemon Athletica for the long-term. And based on the reports I have been reading, 64% of analysts are saying buy, 33% of analysts are saying hold, and 3% are saying sell. In another report, I am seeing that 2 analysts are saying strong buy, 2 are saying buy, 8 are neutral, 2 say sell, and 0 say strong sell. And another report shows that 29.41% of analysts are saying strong buy, 35.29% say buy, 35.29% say hold, 0 say underperform, and 0 say sell.

Disclosure: I own a small number of Lululemon Athletica Inc (NASDAQ: LULU) shares. I wrote this article myself and I do not have any business relationship with any company whose stock I write about. I am not a financial advisor and all articles are my opinion. You should do your own due diligence and consider talking to a financial professional before investing.