By Davit Kirakosyan
A Stifel analyst provided an earnings preview on Lululemon Athletica Inc (NASDAQ:LULU) ahead of the company’s upcoming Q2 results, expected to be reported in early September.
The analyst expects the company to deliver in-line or better quarterly results, highlighting the company’s (1) relative momentum vs. peers, (2) strong merchandise assortment and consumer reception to new product, and (3) deeper inventory positions.
Against a backdrop of subdued fundamental expectations but improving investor sentiment on consumer discretionary names, the analyst believes shares could trade higher into the Q2 report.
Stifel remains comfortable with its in-line revenue and EPS estimates for $1.775 billion and $1.86 reflecting the upper end of the prior guided range of $1.750-$1.775 billion and $1.82-$1.87.
The analyst’s Q2 revenue estimate for a 22.4% year-over-year growth is led by Company-Operated Stores (modeled at +25.1% year-over-year to $869.7 million vs. consensus of $874.9 million). The analyst estimates E-commerce sales to grow 21.1% year-over-year to $724 million (vs. consensus of $725 million) and Other sales (including MIRROR) to grow 15.0% year-over-year to $182 million (vs. consensus of $174.3 million).
Despite the challenging backdrop for many, the analyst has confidence in the company’s fundamental resilience and capacity for outperformance relative to expectations. “Big picture, LULU added guests to the franchise through the pandemic and is monetizing this loyal following by expanding the range of offerings to sell to this loyal consumer base,” added the analyst.
Stifel reiterated its buy rating and $381 price target.