Lululemon Athletica Earnings: LULU stock adds 15% on big Wall Street beat

• Lululemon trounced analyst expectations late Thursday for the first quarter.
• LULU stock advanced to $377 per share on the news in Friday’s premarket.
• Comparable store sales rose 14% YoY, 17% with constant currency.
• Lululemon earned $2.28 per share on $2 billion in revenue.

Lululemon Athletica (LULU) did it again. In something that has become quite predictable, LULU stock sailed 14.9% higher in Friday’s premarket to $377.20 after the prized athleisure brand posted a nearly 15% earnings beat for the first quarter.

NASDAQ futures have rallied 0.5% early Friday as well following the US Senate’s passing of the debt-ceiling bill late Thursday.

Lululemon stock news: Comparable sales rise 14% YoY

If there is any one detail from the earnings report, note that Lululemon revenue grew 14% YoY at comparable stores, even 17% on a constant-currency basis. Unlike other downmarket retailers over the past few months, Lululemon’s wealthier customer base appears to be unphased by talk of a recession.

"Our results reflect the strength of our guest relationships, our innovative products and how our brand resonates across the globe,” said CEO Calvin McDonald. “This year we celebrate our 25th anniversary, and our community-based model remains one of our biggest competitive advantages."

Lululemon posted $2.28 in GAAP earnings per share (EPS), compared to Wall Street’s consensus estimate for $1.99. This amounts to an impressive 54% gain YoY. Earnings benefited from gross margin growing 3.6 percentage points to 57.5%.

Lululemon’s revenue of $2 billion in the quarter beat analyst estimates by $80 million and rose 24% YoY. Sales grew 17% YoY in North America but surged 60% YoY globally, which demonstrates how Lululemon’s brand is becoming a worldwide phenomenon. The comparisons to Nike (NKE) are lost on few shareholders at this point.

“Women's [revenue] was up 22%, men's was up 17% and accessories was up 67%,” McDonald added. “Comparable sales grew 16% in stores and 18% in our e-commerce business.”

The CEO said Lululemon experienced “a meaningful acceleration in the Greater China business” as revenue grew 79%, partially due to last year’s covid effects.”

The growth is also expected to continue. Lululemon’s management team guided for revenue between $2.14 and $2.17 billion in Q2 with GAAP EPS between $2.47 and $2.52.

Lululemon stock forecast

Lululemon stock pulled a massive head-fake on the trading community. LULU stock fell off a cliff when it hit the $386.50 resistance level. The share price lost more than $55 since the beginning of May, and the Relative Strength Index (RSI) had fallen far into oversold territory. Whether it was the debt-ceiling situation or just renewed expectations for a recession, LULU stock actually dropped below the 200-day moving average in Thursday’s regular session. This is typically an extremely bearish sign. 

Just a day later, LULU stock is back near that $386.50 resistance level that pushed the share price lower in both early December 2022 and just last month. A break of this price level would have bulls gunning for the $410 resistance that won the day back in April 2022.

LULU daily chart