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The Zacks Consensus Estimate for fiscal second-quarter sales is pegged at $2.2 billion, indicating a 16.1% increase from the prior-year quarter's reported figure. The Zacks Consensus Estimate for the company's fiscal second-quarter earnings is pinned at $2.53, suggesting a 15% rise from the $2.20 reported in the year-ago quarter. Earnings estimates have moved up by a penny in the past 30 days.
The company delivered an earnings surprise of 15.7% in the last reported quarter. LULU's bottom line beat estimates by 9.9%, on average, in the trailing four quarters.
lululemon has been benefiting from a continued business momentum, backed by a favorable response to its products. Improvement in store traffic, as consumers returned to stores for shopping, and a solid online show bode well. The persistence of these trends is expected to have boosted the company’s top line in the to-be-reported quarter.
LULU has been capitalizing on the importance of physical retail and the convenience of online engagement, which is expected to have boosted its top and bottom-line performances. The company has been focused on investments to enhance the in-store experience. It has been leveraging its stores to facilitate omni-channel capabilities, including buy online pick up in store (BOPUS) and ship from store. It has been implementing several strategies to improve the guest experience and reduce wait time. Store expansion efforts are also expected to have acted as an upside.
lululemon has been gaining from improving online demand. Its accelerated e-commerce investments to ensure a robust shopping experience bode well. The company has been investing in developing sites, building transactional omni functionality and increasing fulfillment capabilities. Some notable efforts in this space are curbside pickups, same-day deliveries and BOPUS. Gains from these initiatives are likely to get reflected in its second-quarter fiscal 2023 top-line results.
Our model predicts company-operated stores and the direct-to-consumer channel to register revenue year-over-year growth of 15.3% each in the fiscal second quarter. Other sales are anticipated to increase 15.7% year over year.
On the last reported quarter’s earnings call, management anticipated the strong business momentum to continue throughout fiscal 2023. LULU expects net revenues of $2.14-$2.17 billion for second-quarter fiscal 2023, indicating 15-16% year-over-year growth. The company projects EPS of $2.47-$2.52 for the fiscal second quarter.
Additionally, the company has been witnessing improved gross and operating margins in recent quarters due to lower expenses. Gross margin gains have been resulting from lower air freight expenses, which have been aiding product margin, as well as a regional mix. Improved gross margin and lower SG&A expense rate have been boosting the operating margin.
We expect the adjusted gross margin to expand 210 basis points (bps) year over year to 58.6% in the fiscal second quarter, suggesting a decline in the cost of sales due to lower freight expenses. Our model predicts an adjusted operating margin of 20.9%, almost flat with the year-ago quarter’s actual. In dollar terms, adjusted operating income is likely to increase 15.4% year over year.
For the second quarter of fiscal 2023, management expects the gross margin to expand 200-220 bps, driven by lower airfreight costs, offset partly by strategic investments to support growth, including supply chain, distribution centers and product teams, as well as modest deleverage on occupancy and depreciation. The operating margin is predicted to expand 10 bps year over year.
However, lululemon has been witnessing elevated inventory levels, which have been concerning. lululemon’s inventory grew 24% at the end of first-quarter fiscal 2023. Management expects inventory growth in line with sales growth in the second half of 2023, which implies a slight increase at the end of the fiscal second quarter.
What the Zacks Model Unveils
Our proven model conclusively predicts an earnings beat for lululemon this season. 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 +2.10%.
Other Stocks Poised to Beat Earnings Estimates
Here are some other stocks that you may want to consider, as our model shows that these also have the right combination of elements to post an earnings beat:
Five Below (FIVE - Free Report) currently has an Earnings ESP of +1.21% and a Zacks Rank of 2. The company is likely to register top and bottom-line growth when it reports second-quarter fiscal 2023 results. The consensus mark for FIVE’s quarterly revenues is pegged at $760.2 million, which suggests growth of 13.6% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for FIVE’s earnings has been unchanged at 83 cents per share in the past 30 days. The consensus estimate indicates 12.2% growth from the year-ago quarter’s reported figure.
American Eagle Outfitters (AEO - Free Report) currently has an Earnings ESP of +8.52% and a Zacks Rank #2. The company is likely to register growth in the bottom line when it reports second-quarter fiscal 2023 numbers. The consensus mark for AEO’s quarterly earnings has moved up 25% to 15 cents per share in the past 30 days. The consensus estimate suggests significant growth of 275% from the year-ago quarter’s reported EPS of 4 cents.
The Zacks Consensus Estimate for American Eagle’s quarterly revenues is pegged at $1.2 billion, which suggests a decline of 0.9% from the figure reported in the prior-year quarter.
Ollie's Bargain Outlet (OLLI - Free Report) currently has an Earnings ESP of +6.12% and a Zacks Rank of 2. The company is likely to register top and bottom-line growth when it reports second-quarter fiscal 2023 results. The consensus mark for OLLI’s quarterly revenues is pegged at $497.6 million, which suggests a rise of 10% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Ollie's earnings has been unchanged in the past 30 days at 61 cents per share. The consensus estimate indicates growth of 177.3% from the year-ago quarter’s reported figure.
Image: Bigstock
lululemon (LULU) Poised for Q2 Earnings Beat on Business Momentum
lululemon athletica inc. (LULU - Free Report) is likely to witness top and bottom-line growth when it reports second-quarter fiscal 2023 results on Aug 31, after market close.
The Zacks Consensus Estimate for fiscal second-quarter sales is pegged at $2.2 billion, indicating a 16.1% increase from the prior-year quarter's reported figure. The Zacks Consensus Estimate for the company's fiscal second-quarter earnings is pinned at $2.53, suggesting a 15% rise from the $2.20 reported in the year-ago quarter. Earnings estimates have moved up by a penny in the past 30 days.
The company delivered an earnings surprise of 15.7% in the last reported quarter. LULU's bottom line beat estimates by 9.9%, 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 benefiting from a continued business momentum, backed by a favorable response to its products. Improvement in store traffic, as consumers returned to stores for shopping, and a solid online show bode well. The persistence of these trends is expected to have boosted the company’s top line in the to-be-reported quarter.
LULU has been capitalizing on the importance of physical retail and the convenience of online engagement, which is expected to have boosted its top and bottom-line performances. The company has been focused on investments to enhance the in-store experience. It has been leveraging its stores to facilitate omni-channel capabilities, including buy online pick up in store (BOPUS) and ship from store. It has been implementing several strategies to improve the guest experience and reduce wait time. Store expansion efforts are also expected to have acted as an upside.
lululemon has been gaining from improving online demand. Its accelerated e-commerce investments to ensure a robust shopping experience bode well. The company has been investing in developing sites, building transactional omni functionality and increasing fulfillment capabilities. Some notable efforts in this space are curbside pickups, same-day deliveries and BOPUS. Gains from these initiatives are likely to get reflected in its second-quarter fiscal 2023 top-line results.
Our model predicts company-operated stores and the direct-to-consumer channel to register revenue year-over-year growth of 15.3% each in the fiscal second quarter. Other sales are anticipated to increase 15.7% year over year.
On the last reported quarter’s earnings call, management anticipated the strong business momentum to continue throughout fiscal 2023. LULU expects net revenues of $2.14-$2.17 billion for second-quarter fiscal 2023, indicating 15-16% year-over-year growth. The company projects EPS of $2.47-$2.52 for the fiscal second quarter.
Additionally, the company has been witnessing improved gross and operating margins in recent quarters due to lower expenses. Gross margin gains have been resulting from lower air freight expenses, which have been aiding product margin, as well as a regional mix. Improved gross margin and lower SG&A expense rate have been boosting the operating margin.
We expect the adjusted gross margin to expand 210 basis points (bps) year over year to 58.6% in the fiscal second quarter, suggesting a decline in the cost of sales due to lower freight expenses. Our model predicts an adjusted operating margin of 20.9%, almost flat with the year-ago quarter’s actual. In dollar terms, adjusted operating income is likely to increase 15.4% year over year.
For the second quarter of fiscal 2023, management expects the gross margin to expand 200-220 bps, driven by lower airfreight costs, offset partly by strategic investments to support growth, including supply chain, distribution centers and product teams, as well as modest deleverage on occupancy and depreciation. The operating margin is predicted to expand 10 bps year over year.
However, lululemon has been witnessing elevated inventory levels, which have been concerning. lululemon’s inventory grew 24% at the end of first-quarter fiscal 2023. Management expects inventory growth in line with sales growth in the second half of 2023, which implies a slight increase at the end of the fiscal second quarter.
What the Zacks Model Unveils
Our proven model conclusively predicts an earnings beat for lululemon this season. 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 +2.10%.
Other Stocks Poised to Beat Earnings Estimates
Here are some other stocks that you may want to consider, as our model shows that these also have the right combination of elements to post an earnings beat:
Five Below (FIVE - Free Report) currently has an Earnings ESP of +1.21% and a Zacks Rank of 2. The company is likely to register top and bottom-line growth when it reports second-quarter fiscal 2023 results. The consensus mark for FIVE’s quarterly revenues is pegged at $760.2 million, which suggests growth of 13.6% from the figure reported in the prior-year quarter.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for FIVE’s earnings has been unchanged at 83 cents per share in the past 30 days. The consensus estimate indicates 12.2% growth from the year-ago quarter’s reported figure.
American Eagle Outfitters (AEO - Free Report) currently has an Earnings ESP of +8.52% and a Zacks Rank #2. The company is likely to register growth in the bottom line when it reports second-quarter fiscal 2023 numbers. The consensus mark for AEO’s quarterly earnings has moved up 25% to 15 cents per share in the past 30 days. The consensus estimate suggests significant growth of 275% from the year-ago quarter’s reported EPS of 4 cents.
The Zacks Consensus Estimate for American Eagle’s quarterly revenues is pegged at $1.2 billion, which suggests a decline of 0.9% from the figure reported in the prior-year quarter.
Ollie's Bargain Outlet (OLLI - Free Report) currently has an Earnings ESP of +6.12% and a Zacks Rank of 2. The company is likely to register top and bottom-line growth when it reports second-quarter fiscal 2023 results. The consensus mark for OLLI’s quarterly revenues is pegged at $497.6 million, which suggests a rise of 10% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Ollie's earnings has been unchanged in the past 30 days at 61 cents per share. The consensus estimate indicates growth of 177.3% from the year-ago quarter’s reported figure.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.