Hot Retail stock to watch: Lululemon Athletica inc. (NASDAQ: LULU)

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Lululemon Athletica inc. (NASDAQ: LULU) stock rose over 7.3% on 6th September, 2019 (as of 9:47 am GMT-4; Source: Google finance) as the company posted better than expected results for the fourth quarter of FY 19. Net income came in at $125 million compared with $95.8 million for the same quarter last year. In the store channel, the company delivered in the 11% constant dollar comp store sales increase on top of a 10% increase in Q2 of last year. Square footage increased 17% versus last year, driven by the addition of 45 net new lululemon stores since Q2 of 2018.  In women’s comps grew 13% as bottoms remained strong, driven by both pants and short. Within the men’s business comps grew 27% with ongoing strength in both tops and bottoms. Like women’s, the men’s side also saw strength in shorts. Across both men’s and women’s, the company continue to innovate to serve the guests across key activities Yoga Run, OTC and Train. During the quarter, the company opened five new stores and completed eight optimizations, including the opening of the experiential store in Lincoln Park.

Moreover, in the digital channel, the company has posted a 31% constant dollar comp increase on top of a very strong 47% increase last year. For the quarter e-com contributed approximately $218 million of top-line or nearly 25% of total revenue. Increased traffic in Q2 continues to drive comps, both in-store and online with increases in the high single-digits and over 30% respectively. Gross profit for the second quarter was $485.8 million or 55% of net revenue, compared to 54.8% of net revenue in Q2, 2018. The gross profit rate in Q2 increased 20 basis points versus gross margin last year. LULU has ended the quarter with $624 million in cash and cash equivalents. Inventory grew 26% and was $494 million at the end of Q2.

LULU in the second quarter of FY 19 has reported the adjusted earnings per share of 96 cents, beating the analysts’ estimates for the adjusted earnings per share of 89 cents, according to Zacks Investment Research. The company had reported the adjusted revenue growth of 22 percent to $883.4 million in the second quarter of FY 19, beating the analysts’ estimates for revenue of $844.3 million.

For the third quarter ending in November, Lululemon expects revenue in the range of $880 million to $890 million. Analysts surveyed by Zacks had expected revenue of $861.7 million.

The company expects full-year earnings to be $4.63 to $4.70 per share, with revenue is expected to range from $3.8 billion to $3.84 billion.

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