Lululemon Athletica (NASDAQ: LULU) has been one of the best-performing retail stocks in the past decade. Since June 2012, LULU stock has returned over 300% to investors compared to the S&P 500 returns of 280%. If you zoom out further, LULU stock has gained almost 2,000% since the company went public in July 2007.
However, similar to other growth stocks, Lululemon shares have also declined in the last six months. At the time of writing, LULU stock is trading 38.8% below all-time highs valuing the company at $37.5 billion by market cap.
Let's see if Lululemon can gain momentum after reporting its Q1 results for fiscal 2022.
Lululemon is scheduled to report its earnings for fiscal Q1 of 2022 (ended in April) on Thursday, June 2nd at 4:30 pm Eastern Time.
To listen to the call and access the earnings transcript, as well as the shareholder's letter and the company's financial statements for the quarter, all you need to do is go to Lululemon's investor relations page.
Analysts tracking Lululemon estimate the company to report revenue of $1.53 billion with adjusted earnings per share of $1.43. In the year-ago period, Lululemon reported revenue of $1.22 billion and adjusted earnings of $1.16 per share. So, while revenue is forecast to rise 25.4%, earnings might expand by 23.3% year-over-year in the April quarter.
Given a volatile equity market and an uncertain macro environment, all eyes will be on Lululemon's guidance for fiscal 2022. Analysts expect Lululemon sales to rise by 20.5% to $7.54 billion, while earnings are estimated to widen by 19% to $9.28 per share in fiscal 2022.
Lululemon has increased sales from $3.28 billion in fiscal 2018 to $6.25 billion in fiscal 2021. Its operating income has surged from $705 million to $1.37 billion in this period. Despite the shutdown of retail stores during the COVID-19 pandemic, Lululemon's sales continued to rise year-over-year as the company successfully increased direct-to-consumer revenue.
In fiscal 2020, Lululemon's direct to consumer (D2C) revenue accounted for 52% of total sales, compared to 29% in 2019. In 2021 due to the relaxation of lockdown restrictions and reopening of economies, Lululemon's D2C sales accounted for 44% of total revenue.
Lululemon is well-poised to grow its top line going forward as it continues to expand its retail footprint. The company ended 2021 with 574 stores in 17 countries. In addition, it opened 53 net new company-operated stores last year, 43 of which were outside North America.
In fiscal 2022, Lululemon believes new store growth will be driven by company-operated store openings in Asia and the U.S.
Despite the ongoing sell-off in growth stocks, Lululemon stock is valued at 5x forward sales and 31.5 times forward earnings, which can be considered expensive. So, if Lululemon disappoints investors with less than impressive Q1 earnings or weak guidance, the stock will move significantly lower this week.
It will be foolish for long-term investors to write-off a company like Lululemon as the retail heavyweight has exceptional financials and has survived a financial meltdown as well as a global pandemic as a publicly listed entity.
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