Lululemon Athletica (LULU) Earnings: Sexy is Never Out of Style

What’s not to like at Lululemon Athletica (LULU)?

The $2.5B apparel maker reported revenue up 55.8 percent to $152M from the year-ago quarter and EPS of $0.30 (diluted) cents compared to $0.13(diluted) in the prior-year period. Comparable stores sales were up by 31 percent on a constant-dollar basis.

The second-quarter results for LULU continue a trend of strong performance for LULU for the first twenty-six weeks of fiscal year 2010 compared to the same period a year ago:

-Net revenue up 61.9 percent

-Gross profit up 92.9 percent

-Operating income up 175.9 percent

LULU makes “yoga-inspired” athletic apparel for the health-conscious consumer. Based on its year-to-date performance, the company raised its outlook to $1.18 to $1.22 for fiscal year 2010. The company slogan “Do one thing a day that scares you” has cult-like resonance with upscale women buyers.

Christine Day, Lululemon’s CEO stated: “Our strong sales momentum reflects increased brand awareness driven by the strength of our product innovation, guest experience and community engagement. We achieved $1,532 in sales per square foot for the second quarter driven by the exceptional performance of our newest stores. We are intently focused on our existing growth strategies which include fueling our rapidly growing e-commerce business and leveraging our showrooms into 20 to 25 store openings in 2011.”

The market rewarded LULU with a more than 10 percent gap up at the morning bell.

Lululemon Athletica (NASDAQ: LULU)


Impressive growth at LULU reflects its strong brand, technologically advanced products, and cultural tie-ins to better health and going “green” trends… but above all, sexy, as the company’s trademark pants are engineered to flatter the butt like no other. Since the company’s origins in 1998, LULU’s product offerings have become status symbols for the fit and well-to-do, who have it AND can flaunt it. It’s hard to fault a company with a positioning strategy like that: sexy is never out of style. The high-flying stock, which reached a high of 46.49 following last quarter’s earnings report, should continue to do well despite a sagging economy and soar in a recovering one. MACD shows the downward trend reversing but an uptrend may be short-lived with Stochastic at overbought.

Disclosure: No position in stocks mentioned.