Hot Retail Stock to Watch: Lululemon Athletica Inc (NASDAQ: LULU)

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Lululemon Athletica Inc (NASDAQ: LULU) stock rose over 2.6% on June 4th, 2021 (as of 11:28:51 UTC-4 · USD ; Source: Google finance) as the company’s revenue soared in the first quarter driven by an ongoing e-commerce expansion and a rebound in brick-and-mortar store sales.

The company-operated stores net revenue soared 106% to $536.6 million. The direct to consumer net revenue grew 55% to $545.1 million. Geographically, the net revenue increased 82% in North America, and increased 125% internationally. The direct to consumer net revenue represented 44.4% of total net revenue compared to 54% for the first quarter of 2020.  The Company has ended the first quarter of 2021 with $1.2 billion in cash and cash equivalents and the capacity under its committed revolving credit facilities was $397.3 million. Inventories at the end of the first quarter of 2021 rose 17% to $732.9 million compared to $625.8 million at the end of the first quarter of 2020. The Adjusted income from operations increased 479% to $201.5 million during the period. The Company had opened two net new company-operated stores during the quarter, ending with 523 stores.

Meanwhile, the company’s strong performance came as it continued to navigate operating challenges related to the pandemic, including ongoing store closures, capacity constraints, supply chain challenges with ports and reduced air freight capacity.

LULU in the first quarter of FY 21 has reported the adjusted earnings per share of 15 cents, beating the analysts’ estimates for the adjusted earnings per share of 13 cents. The company had reported the adjusted revenue growth of 88 percent to $1.2 billion in the first quarter of FY 21. Gross profit rose 109% to $700.3 million and gross margin expanded 580 basis points to 57.1%. The adjusted operating margin increased 1,110 basis points to 16.4% during the period.

Additionally, during the first quarter, the Company had repurchased 0.3 million shares of its own common stock at an average cost of $311.02 per share.

For the second quarter of 2021, the company expects net revenue to be in the range of $1.300 billion to $1.330 billion. The Q2 adjusted diluted earnings per share are expected to be in the range of $1.10 to $1.15.

For 2021, the company expects net revenue to be in the range of $5.825 billion to $5.905 billion. FY 21 adjusted diluted earnings per share are expected to be in the range of $6.73 to $6.86.

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