Core Viewpoint - lululemon athletica inc. (LULU) is expected to report top-line growth in its second-quarter fiscal 2025 results, with sales projected at $2.53 billion, reflecting a 6.9% increase year-over-year [1][10]. Financial Performance - The consensus estimate for fiscal second-quarter earnings is $2.84 per share, indicating a 9.8% decline from the previous year [2]. - lululemon has a trailing four-quarter earnings surprise of 5% on average, but the current model does not predict an earnings beat for this season, with an Earnings ESP of -1.11% and a Zacks Rank of 4 (Sell) [3][4]. Cost and Margin Pressures - The company faces ongoing headwinds from increased tariffs on imports from China and Mexico, which are expected to raise costs and pressure gross margins [5][6]. - For the second quarter, lululemon anticipates a gross margin decline of 20 basis points year-over-year, with SG&A expenses expected to deleverage by 170-190 basis points [7][9]. - The operating margin is projected to decline by 380 basis points year-over-year, contrasting with a growth of 110 basis points in the prior-year quarter [8]. Market Dynamics - lululemon's performance is impacted by a decline in store traffic in the U.S. due to macroeconomic pressures, including inflation and economic uncertainty [11]. - Despite challenges in North America, the company is expected to benefit from strong international growth, particularly in Mainland China, with international revenues projected to increase by 9.4% year-over-year [12][13]. Strategic Initiatives - The company is executing its Power of Three x2 growth plan, focusing on product innovation, guest experience, and market expansion to drive long-term growth [22][23]. - Initiatives such as community-based events and brand campaigns are crucial for increasing brand awareness and customer loyalty [12]. Stock Performance and Valuation - lululemon's shares have declined by 37.4% over the past three months, underperforming the industry and broader market indices [14]. - The stock currently trades at a forward 12-month P/E multiple of 13.55X, above the industry average of 11.39X, indicating strong investor expectations for future performance [19][20]. Long-term Outlook - Despite near-term pressures from inflation, tariffs, and softer discretionary spending, lululemon's long-term growth narrative remains compelling, supported by its strategic initiatives and international expansion [24][25].

Core Viewpoint - Lululemon athletica inc. (LULU) experienced a significant stock decline of 19.8% following its first-quarter fiscal 2025 earnings report, despite surpassing revenue and EPS estimates. The decline is attributed to investor concerns regarding the company's updated outlook, particularly the impact of rising import tariffs on gross margins in the latter half of the year [1][10][13]. Financial Performance - Lululemon's management revised its full-year gross margin outlook downward, now expecting a decline of 110 basis points year over year, which is nearly double the previously forecasted 60 basis points drop [6]. - The second-quarter guidance indicates a steep 380-basis point drop in operating margin, signaling potential near-term profitability challenges [6][10]. - SG&A expenses rose by 11.9% year over year, outpacing revenue growth and leading to margin deleverage, with an anticipated 50-basis point SG&A deleverage for the full year [7]. Market Dynamics - There is a noted decline in comparable sales in North America, particularly in the U.S., where store traffic has decreased compared to the previous quarter. Although average transaction values increased, overall sales volume has been negatively impacted [8]. - Elevated inventory levels are concerning, with inventory up 17% year over year while revenues only increased by 7%. This situation raises the risk of markdown pressure if demand remains weak [9]. Long-term Outlook - Despite short-term challenges, Lululemon is positioned for long-term growth, supported by a strong global brand and an innovation-led product strategy. The company is expanding its international presence, particularly in markets like China and EMEA, where sales are growing at double-digit rates [11][12]. - Lululemon maintains a healthy balance sheet with $1.3 billion in cash and no debt, allowing for continued investment in innovation and supply chain improvements [12]. - The company's long-term strategy, including the Power of Three x2 growth plan, remains focused on sustained growth in men's, digital, and international channels [12][14].

Core Viewpoint - lululemon athletica inc. (LULU) is expected to report growth in both sales and earnings for the first quarter of fiscal 2025, with sales estimated at $2.35 billion, reflecting a 6.6% increase year-over-year [1] Financial Performance - The consensus estimate for fiscal fourth-quarter earnings is $2.58 per share, indicating a 1.6% growth from the previous year [2] - lululemon has a trailing four-quarter earnings surprise average of 6.6%, suggesting a strong performance trend [2] - The company anticipates EPS for the first quarter to be between $2.53 and $2.58, compared to $2.54 in the prior-year quarter [10] Growth Drivers - Continued business momentum is expected in Q1, driven by positive consumer response, increased in-store traffic, and robust online performance [4] - The company is benefiting from strong international market performance, particularly in Mainland China, with a predicted 2.3% year-over-year revenue increase [6] - lululemon's Power of Three x2 growth plan focuses on product innovation, guest experience, and market expansion, which are crucial for brand awareness and customer loyalty [5][19] Challenges - The company faces challenges from inflation and higher interest rates, leading to soft discretionary spending and struggles in the women's category in the Americas [7][18] - Tariff dynamics are expected to negatively impact margins due to elevated costs, with management expressing concerns over rising tariffs on imports from Mexico and China [8] - The gross margin is expected to remain flat year-over-year, with a decline in operating margin anticipated [9][10] Market Performance - lululemon's shares have declined 8.9% over the past three months, underperforming the industry and broader market indices [11] - The stock currently trades at a forward 12-month P/E multiple of 20.74X, above the industry average of 12.72X, indicating strong investor expectations but potential overvaluation [15][17] Long-term Outlook - Despite near-term challenges, lululemon's long-term growth strategy remains intact, with a goal to double net revenues to $12.5 billion by 2026 [19] - The company aims to quadruple international revenues, targeting nearly 50% of total sales from these markets [20] - lululemon's strategic initiatives and international growth are expected to drive sustained value over time, making it a fundamentally strong business [21][22]

lululemon athletica inc. (LULU) is likely to witness top and bottom-line growth when it reports fourth-quarter fiscal 2024 results on March 27, after market close. The Zacks Consensus Estimate for fiscal fourth-quarter sales is pegged at $3.6 billion, indicating an 11.7% increase from the year-ago quarter's reported figure.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.The consensus estimate for the company's fiscal fourth-quarter earnings is pegged at $5.85 per share, suggesting 1 ...