Lululemon Athletica Pops on Q1 Beat, Stock Buyback Boost
Lululemon stock is higher after the retailer disclosed higher-than-expected fiscal Q1 results and raised its stock buyback plan. Here's what you need to know.
Lululemon Athletica (LULU) stock is trading higher Thursday after the athletic apparel retailer beat top- and bottom-line expectations for its fiscal first quarter and announced a $1 billion increase to its share repurchase program.
In the quarter ended April 28, Lululemon said its net revenue increased 10.4% year-over-year to $2.2 billion, driven by a 35% rise in international net revenues. Additionally, LULU disclosed n 11.4% jump in earnings to $2.54 per share.
"In the first quarter, we saw strong momentum in our international markets, demonstrating how our brand continues to resonate around the world," Lululemon CEO Calvin McDonald said in a statement. "Guests responded well to our product innovations across categories, and we are pleased by the progress we are making to optimize our U.S. product assortment."
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The results came in ahead of analysts’ expectations. According to Yahoo Finance, Wall Street was anticipating revenue of $2.19 billion and earnings of $2.38 per share.
For the second quarter, Lululemon said it expects net revenue in the range of $2.4 billion to $2.42 billion and EPS to arrive between $2.92 to $2.97. This is slightly below the $2.45 billion in revenue and $3.01 in earnings per share analysts' are projecting.
For the full year, LULU said it continues to expect net revenue in the range of $10.7 billion to $10.8 billion. However, it now expects earnings to arrive between $14.27 to $14.47 per share, up from its previous range of $14 to $14.20.
Lululemon also said its board of directions approved a $1 billion increase to its stock buyback program, bringing the total remaining to $1.7 billion, or 4.2% of its current market cap.
Stock repurchases, also known as buybacks, are another way for corporations to boost value for shareholders. As Kiplinger contributor Mark Hake explains in his piece on "What Is a Stock Buyback," a company "that buys back its shares will produce a higher stock price because as its shares count falls, it forces the price higher."
Hake goes on to explain "that effect produces more value for shareholders, as they pay no taxes on this unrealized gain (until they sell shares)."
Is Lululemon stock a buy, sell or hold?
The consumer discretionary stock is down more than 38% for the year to date, but analysts remain upbeat. According to S&P Global Market Intelligence, the consensus analyst target price for LULU stock is $405.47, representing implied upside of more than 30% to current levels. Meanwhile, the consensus recommendation is a Buy.
CFRA Research analyst Zachary Warring maintained a Strong Buy on LULU stock after the earnings release.
"Although the company is experiencing growth deceleration in the Americas, we continue to believe LULU is the top player in apparel retail and expect an acceleration in growth across the Americas and continued success in China (+45% in Q1) and internationally," Warring wrote in a note to clients.
The analyst has a $435 price target on LULU stock, representing implied upside of nearly 40% to current levels.
Related Content
-
Is Home Insurance Tax Deductible?With home insurance rates on the rise, you might be hoping to at least claim the cost as a tax deduction. Here's what you need to know ahead of tax season.
-
The December Jobs Report Is Out. Here's What It Means for the Next Fed MeetingThe December jobs report signaled a sluggish labor market, but it's not weak enough for the Fed to cut rates later this month.
-
Trump Signals Plan to Ban Institutional Investors From Buying Single-Family HomesThe president says the move could improve housing affordability. Here’s what the data shows about investor ownership, recent buying trends and what it could mean for homebuyers.
-
The December Jobs Report Is Out. Here's What It Means for the Next Fed Meeting
The December jobs report signaled a sluggish labor market, but it's not weak enough for the Fed to cut rates later this month.
-
4 Simple Money Targets to Aim for in 2026 (And How to Hit Them), From a Financial PlannerWhile January is the perfect time to strengthen your financial well-being, you're more likely to succeed if you set realistic goals and work with a partner.
-
I'm a Wealth Adviser: Everyone Needs an Estate Plan (Seriously, Even You)If you've acquired assets over time, even just a home and some savings, you have an estate. That means you need a plan for that estate for your beneficiaries.
-
How to Be a Smart Insurance Shopper: The Price Might Be Right, But the Coverage Might Not BeChoosing the cheapest policy could cost you when you have a loss. You'll get the best results if you focus on the right coverage with the help of a good agent.
-
7 Reasons Why Your Portfolio Needs Short-Term Bond ETFsMoney market funds are a safe option for your cash, but ultra-short and short-term bond ETFs also deserve consideration. Here are seven reasons why.
-
Nasdaq Takes a Hit as the Tech Trade Falters: Stock Market TodayThe Dow Jones Industrial Average outperformed on strength in cyclical stocks.
-
I'm a Wealth Planner: Forget 2026 Market Forecasts and Focus on These 3 Goals for Financial SuccessWe know the economy is unpredictable and markets will do what they do, no matter who predicts what. Here's how to focus on what you can control.
-
I'm a Financial Adviser: Why In-Person Financial Guidance Remains the Gold StandardFace-to-face conversations between advisers and clients provide the human touch that encourages accountability and a real connection.
