Many Thanks
Greg
In Q3, LULU beat EPS and revenue forecasts. EPS came in at $2.53, beating estimates of $2.28. Revenue was $2.2B displaying year-over-year growth of 19% and beating estimates of $2.19B. Lululemon opened 14 new stores during the quarter, bringing total store count up to 686. LULU ended the quarter with $1.1 billion in cash and equivalents. LULU was down pre-market following the earnings beat, as markets were initially not happy that LULU failed to raise its guidance in the quarter. But then the stock bounced as investors seemed pleased with online sales over Thanksgiving and re-thought its performance. We think this was a strong quarter with many banks upping price targets for LULU. Despite soft guidance (which we agree looks conservative) we think LULU will continue to deliver. Cyber Week was solid with Black Friday marking its best sales day ever. The opportunity to grow men's and international, coupled with store expansion, are catalysts. Women's remains healthy with 19% sales growth in 3Q, led by product launches like its Wundermost collection. In that quarter, total revenue gained 19% to top estimates, led by digital (18%) and comparable-store sales (9%). International growth of 49%, including a 53% increase in China, bodes well for its goal to quadruple sales abroad by 2026.