Earnings Cheat Sheet: Lululemon Proves Consumer Revival, Revenues up 56%

lululemon athletica inc. (LULU) is a Canadian athletic apparel retailer known for hip fitness and healthy lifestyle clothing. In November, Oprah aired her ‘Favorite Things’ episode and lululemon’s $98 drawstring pants hit the list of six. Oprah’s magic touch would only be the icing on the cake for an incredible quarter. Following last quarter’s sexy numbers, here’s the earnings breakdown on this quarter:

Earnings: Jumped to $.36 per share, or $25.7 million, compared to $.20 per share, or $14.1 million, in the same period a year ago.

Revenue: Rocketed 56% to $175.8 million, compared to $112.9 million in the prior year.

Actual versus Wall Street Expectations: Earnings of $.36 cents per share beat expectations by $.11 cents.  The consensus analyst earnings expectation was $.25 cents per share. Revenues widely beat the expected $159.03 million revenue estimate (Thomson Reuters).

Notable Stats: The company has beat earnings estimates five straight quarters in a row.

The trailing P/E ratio is 56.27 and the forward P/E ratio is 44.86, according to Yahoo Finance.

LULU ended the third quarter of fiscal 2010 with $224.8 million in cash and cash equivalents compared to $101.8 million at the end of the third quarter of fiscal 2009. The company carries zero debt on its balance sheet.

Forecasting the 4th quarter, the LULU expects net income of $.46 to $.48 per share on revenue of $210 million to $215 million.

Did You Hear That? Christine Day, lululemon’s CEO stated: “Our technical product continues to drive our top line growth, cementing our position as an innovative athletic wear company with yoga at our core. ”

Commentary: Retail has been on the rocks in the eyes of many Wall Street analysts. However, there are certain retailers that just keep proving all the skeptics wrong. The numbers out of lululemon (LULU) are nothing short of amazing as investors are lifting the shares higher by over $10 today. Following a late Summer breakout, shares have been gradually trending higher with an added ‘Oprah effect’ in November. With the tax cut extension and a less fearful luxury consumer, LULU continues to prove its itself as a retailer. Given the huge spike in shares after the earnings announcement, we suggest waiting for a cool-off/settle down phase before entering LULU shares for the first time.

Disclosure: No position in LULU.

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