Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
Lululemon (LULU) reported this morning, and while their was an initial downward move (along with the rest of the market) as guidance was mixed – usually a nono for high beta, momentum stocks – almost no one has been hurt buying an earnings related dip in 2012, so people (and computers) of course rushed in as the stock fell to the 20 day moving average. The stock is already back to nearly unchanged as I type this. Par for the course in 2012.
LULU beat by 2 cents on the bottom line and about $10M on the top line. Same store sales at an astounding 26% and why this company is worshiped on Wall Street. However some pressure on margins.
Guidance was a bit mixed with EPS at 28-29 cents versus estimates of 30 and revenue of $265 – $270M versus estimates of $257M. So based on that, either the company is lowballing EPS estimates (since revenue is higher than estimates, but EPS lower) or there is some margin pressure the company is guiding to. For the full year the company guided to $1.50 – $1.57, versus estimates of $1.61 with revenue guidance a tad over estimates. Full report here.
Per Reuters:
- Lululemon Athletica Inc reported a surge in quarterly profit on Thursday as sales in its established yogawear shops jumped, but profit margins narrowed and inventory grew. Gross profit margin fell to 56.3 percent from 58.5 percent the year earlier, and inventory at the end of the quarter rose to $104.1 million up from $57.5 million a year earlier.
- The results were slightly ahead of a revised forecast the company gave in January after a stronger-than-expected holiday shopping season.
- “Lululemon needed to just blow the earnings results out of the way, which was going to be hard” given January’s forecast, said Brian Sozzi, chief equities analyst at NBG Productions. Sozzi said the inventory growth over and above same-store sales would likely raise concerns that margins could deteriorate further in the fi rst half of the year.
- For its fiscal fourth quarter ended Jan. 29, net income rose to $73.5 million, or 51 cents a share, from $54.8 million, or 38 cents, a year earlier. Analysts, on average, had expected earnings of 49 cents a share, according to Thomson Reuters I/B/E/S.
- Total revenue rose 51.4 percent to $371.5 million, higher than analysts had expected, while same-store sales, a key measure for retailers, climbed 26 percent.
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