Lululemon Earnings: What to Know Ahead of Release This Week

March 18, 2024

Lululemon clothes stock

As investors anticipate the upcoming earnings report from Lululemon Athletica Inc. (NASDAQ: LULU) on March 21, 2024, there is a palpable buzz around how the athleisure giant will perform.

Here’s what investors need to know about the company known for its premium yoga pants and athletic wear.

1. Q4 Expectations and Beyond

Most analysts are not expecting an eventful Q4, aligning with pre-announcements made in January. However, the focus will likely shift swiftly to the guidance for 2024.

Current sentiment suggests a conservative outlook from Lululemon as Wall Steet expect to see revenue growth of 14% and an earnings per share (EPS) projection of $14.29.

2. Lululemon brand remains resilient

Evidence of Lululemon’s resilience is visible in the robust data points. Google Trends indicates a significant year-over-year increase in searches, suggesting sustained consumer interest. Lululemon’s mobile app, possibly buoyed by the company’s integration with Peloton, has seen a spike in downloads and monthly active users.

3. Globalisation and Gender Expansion

The long game for Lululemon remains promising. As the brand sets its sights on becoming a dual-gender brand and pushing globalisation efforts, particularly in China, this could drive growth.

Interestingly, while there is a deceleration signaled by other brands in the Chinese market, Lululemon appears poised to maintain a strong performance through new international store openings and rising brand awareness.

4. Industry Context

In a broader context, Lululemon’s earnings release comes at a time when aspirational consumers are becoming increasingly selective. Yet, the brand’s high-teen revenue growth suggests that its products remain in demand despite economic headwinds that have affected other premium brands. The company’s trajectory aligns with its ambitious long-term growth algorithm of 15% CAGR.

5. Financial Health

Lululemon’s financial health appears robust, with inventory levels described as “in good shape,” positioning the company to potentially avoid aggressive markdowns and preserve gross margins. The focus on inventory management, coupled with direct-to-consumer (DTC) growth, underlines Lululemon’s strategic direction.

2024 guidance will be key for Lululemon

In conclusion, as Lululemon gears up to unveil its earnings, the key factors for investors to watch will be the 2024 guidance and any indications of how the brand will navigate the anticipated slowdown. Despite a potential moderation in growth, Lululemon’s strong brand affinity, global expansion efforts, and operational efficiency present a compelling case for investors looking for a robust growth story in the athletic apparel sector.

Disclaimer: ProsperUs Head of Content & Investment Lead Billy Toh doesn’t own shares of the company mentioned.

Billy Toh

Billy is deeply committed to making investment accessible and understandable to everyone, a principle that drives his engagement with the capital markets and his long-term investment strategies. He is currently the Head of Content & Investment Lead for Prosperus and a SGX Academy Trainer. His extensive experience spans roles as an economist at RHB Investment Bank, focusing on the Thailand and Philippines markets, and as a financial journalist at The Edge Malaysia. Additionally, his background includes valuable time spent in an asset management firm. Outside of finance, Billy enjoys meaningful conversations over coffee, keeps fit as a fitness enthusiast, and has a keen interest in technology.

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