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lululemon (LULU) to Report Q3 Earnings: Is a Beat in Store?
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lululemon athletica inc. (LULU - Free Report) is slated to report third-quarter fiscal 2020 results on Dec 10, after market close. The yoga-inspired athletic apparel company is likely to have witnessed sales growth in the quarter under review. The Zacks Consensus Estimate for fiscal third-quarter sales is pegged at $1.01 billion, indicating a 10.4% increase from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for the company’s fiscal third-quarter earnings is pegged at 86 cents, suggesting a decline of 10.4% from the year-ago quarter’s reported figure. Earnings estimates have moved up by a penny in the past seven days.
The company delivered an earnings surprise of 32.1% in the last reported quarter. Moreover, its bottom line beat estimates by 5.3%, on average, in the trailing four quarters.
lululemon has been witnessing momentum in its e-commerce business since the onset of the coronavirus pandemic. Its retail business has been gaining from accelerated expansion of e-commerce and digital sweat offerings. Its products crafted with technical innovation and performance fabrics are likely to have aided performance in the fiscal third quarter due to the pandemic-led rise in work-from-home and versatile lifestyle. Moreover, the acquired MIRROR brand is likely to have improved the company’s at-home fitness offerings.
It has been investing in websites and mobile app for the past several quarters to enhance the guest experience, which has been aiding the top-line performance. The company’s direct-to-consumer sales through its website and app jumped 155% on a reported basis and 157% in constant dollars in the fiscal second quarter. The growing online demand through its accelerated e-commerce investments is likely to have aided the company’s top line in the fiscal third quarter.
On the last reported quarter’s earnings call, the company predicted the revenue trend to improve sequentially in the second half. Including the MIRROR buyout, lululemon expects total revenues to increase mid- to high-single digits in the fiscal third quarter and in the high-single to low-double digits in the fourth quarter. In the digital business, revenues are expected to remain higher than the pre-COVID levels of 20-30% growth.
However, digital sales in the second half of fiscal 2020 are likely to be moderate compared with the second quarter as the majority of the company-operated stores have reopened.
Also, lululemon’s margins are likely to have been pressured by higher costs in the fiscal third quarter. In the last reported quarter’s earnings call, management predicted gross margin for the fiscal third quarter to decline on a year-over-year basis. Further, it expects continued SG&A expenses deleverage in the back half of fiscal 2020 primarily due to investments in select growth initiatives — particularly digital, and as store traffic remains below the last-year levels. Further, the company expects the MIRROR buyout to contribute to SG&A expenses deleverage in the fiscal third and fourth quarters.
Moreover, lululemon expects adjusted earnings to decline in the third quarter before increasing modestly in the final quarter.
Zacks Model
Our proven model predicts an earnings beat for lululemon this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
lululemon has a Zacks Rank #3 and an Earnings ESP of +2.78%.
Other Stocks Likely to Beat Earnings Estimates
Here are some other companies that you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat.
General Mills, Inc. (GIS - Free Report) presently has an Earnings ESP of +1.34% and a Zacks Rank #3.
Constellation Brands Inc. (STZ - Free Report) currently has an Earnings ESP of +2.64% and a Zacks Rank #3.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Image: Bigstock
lululemon (LULU) to Report Q3 Earnings: Is a Beat in Store?
lululemon athletica inc. (LULU - Free Report) is slated to report third-quarter fiscal 2020 results on Dec 10, after market close. The yoga-inspired athletic apparel company is likely to have witnessed sales growth in the quarter under review. The Zacks Consensus Estimate for fiscal third-quarter sales is pegged at $1.01 billion, indicating a 10.4% increase from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for the company’s fiscal third-quarter earnings is pegged at 86 cents, suggesting a decline of 10.4% from the year-ago quarter’s reported figure. Earnings estimates have moved up by a penny in the past seven days.
The company delivered an earnings surprise of 32.1% in the last reported quarter. Moreover, its bottom line beat estimates by 5.3%, on average, in the trailing four quarters.
lululemon athletica inc. Price and EPS Surprise
lululemon athletica inc. price-eps-surprise | lululemon athletica inc. Quote
Key Factors to Note
lululemon has been witnessing momentum in its e-commerce business since the onset of the coronavirus pandemic. Its retail business has been gaining from accelerated expansion of e-commerce and digital sweat offerings. Its products crafted with technical innovation and performance fabrics are likely to have aided performance in the fiscal third quarter due to the pandemic-led rise in work-from-home and versatile lifestyle. Moreover, the acquired MIRROR brand is likely to have improved the company’s at-home fitness offerings.
It has been investing in websites and mobile app for the past several quarters to enhance the guest experience, which has been aiding the top-line performance. The company’s direct-to-consumer sales through its website and app jumped 155% on a reported basis and 157% in constant dollars in the fiscal second quarter. The growing online demand through its accelerated e-commerce investments is likely to have aided the company’s top line in the fiscal third quarter.
On the last reported quarter’s earnings call, the company predicted the revenue trend to improve sequentially in the second half. Including the MIRROR buyout, lululemon expects total revenues to increase mid- to high-single digits in the fiscal third quarter and in the high-single to low-double digits in the fourth quarter. In the digital business, revenues are expected to remain higher than the pre-COVID levels of 20-30% growth.
However, digital sales in the second half of fiscal 2020 are likely to be moderate compared with the second quarter as the majority of the company-operated stores have reopened.
Also, lululemon’s margins are likely to have been pressured by higher costs in the fiscal third quarter. In the last reported quarter’s earnings call, management predicted gross margin for the fiscal third quarter to decline on a year-over-year basis. Further, it expects continued SG&A expenses deleverage in the back half of fiscal 2020 primarily due to investments in select growth initiatives — particularly digital, and as store traffic remains below the last-year levels. Further, the company expects the MIRROR buyout to contribute to SG&A expenses deleverage in the fiscal third and fourth quarters.
Moreover, lululemon expects adjusted earnings to decline in the third quarter before increasing modestly in the final quarter.
Zacks Model
Our proven model predicts an earnings beat for lululemon this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
lululemon has a Zacks Rank #3 and an Earnings ESP of +2.78%.
Other Stocks Likely to Beat Earnings Estimates
Here are some other companies that you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat.
DISH Network Corporation currently has an Earnings ESP of +6.41% and it sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
General Mills, Inc. (GIS - Free Report) presently has an Earnings ESP of +1.34% and a Zacks Rank #3.
Constellation Brands Inc. (STZ - Free Report) currently has an Earnings ESP of +2.64% and a Zacks Rank #3.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Click here for the 6 trades >>