Retail stock under pressure: Lululemon Athletica Inc (NASDAQ: LULU) stock

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Lululemon Athletica Inc (NASDAQ: LULU) stock lost over 4.5% on March 27th, 2020 (As of 11:18 am GMT-4; Source: Google finance) post fourth quarter of 2019. The company has delivered the net income for the quarter of $298 million but decided not to provide financial guidance at this time. The company has ended the year with $1.1 billion in cash, no long-term debt, and a $400 million untapped revolver. The company invests in key technologies, including RFID and strong partnerships with the vendors, will enable the company to maximize inventory across their network. Inventory increased 28%to $518.5 million at the end of Q4.

In the store channel, the company has delivered a 9% constant dollar comp store sales rise on top of a 7% increase in Q4 of last year. Square footage rose 18% versus last year, due to the addition of 51 net new Lululemon stores since Q4 of 2018. During the fourth quarter, the company had opened 12 net new stores and completed five optimizations. In the digital channel, the company has posted a 41% constant dollar comp growth on top of a 39% increase last year. For the fourth quarter, e-comm contributed about $464 million of top line or 33% of total revenue. The rise in traffic in Q4 continued to drive comps, both in-store and online, with increases in the high single-digits and over 30% respectively.

The company posted the gross profit for the fourth quarter of $811 million or 58% of net revenue, compared to 57.3% of net revenue in Q4, 2018. The gross profit rate in Q4 expanded 70 basis points compared to gross margin last year, and due to an 80-basis point increase in overall product margin, resulting from lower product costs, and favorability in product mix.

LULU in the fourth quarter of FY 19 has reported the adjusted earnings per share of $2.28, beating the analysts’ estimates for the adjusted earnings per share of $2.24, according to Refinitive Ibes Data. The company had reported the adjusted revenue growth of 20 percent to $1.4 billion in the fourth quarter of FY 19, beating the analysts’ estimates for revenue of $1.38 billion.

Capital expenditures were approximately $69 million for the fourth quarter, compared to approximately $69 million in the fourth quarter last year. The company in Q4 spent to store capital for new locations, relocations and renovations, and IT and supply chain investment.

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