Lululemon Athletica (LULU) stock is trading lower Friday after the athleisure apparel company reported second-quarter results that were mixed compared with analysts' expectations and lowered its full-year outlook.
In the quarter ended July 28, Lululemon's revenue increased 7.3% year-over-year to $2.37 billion, driven by a 29% pop in international sales. Its earnings per share (EPS) were up 17.5% from the year-ago period to $3.15.
"In the second quarter, Lululemon delivered revenue and earnings growth, with ongoing strength across our international business," said Lululemon CEO Calvin McDonald in a statement. "In the U.S., our teams continue to optimize our product assortment and remain focused on driving forward our opportunities in the market."
The results were mixed compared with analysts' expectations. Wall Street was anticipating revenue of $2.41 billion and earnings of $2.93 per share, according to CNBC.
As a result of "uncertainties in the macro environment," as management mentioned in the earnings call, Lululemon slashed its full-year outlook. The company now anticipates revenue in the range of $10.375 billion to $10.475 billion and earnings per share of $13.95 to $14.15. It had previously forecast revenue to arrive between $10.7 billion to $10.8 billion and EPS of $14.27 to $14.47.
For the third quarter, Lululemon said it is guiding for revenue of $2.34 billion to $2.365 billion and earnings per share in the range of $2.68 to $2.73.
Is Lululemon stock a buy, sell or hold?
Lululemon Athletica has vastly underperformed the broad market in 2024, down 50% for the year to date vs the S&P 500's 18% gain. But Wall Street remains bullish on the consumer discretionary stock.
According to S&P Global Market Intelligence, the average analyst target price for LULU stock is $322.20, representing implied upside of more than 25% to current levels. Meanwhile, the consensus recommendation is a Buy.
Financial services firm Stifel is one of the more bullish outfits on LULU stock with a Buy rating and $370 price target.
"We see LULU uniquely positioned at the intersection of secular trends and believe international growth contribution is under-appreciated in shares," says Stifel analyst Jim Duffy. The analyst anticipates "multiple years of mid-teens plus revenue growth and margin expansion," which he believes will be complemented by stock buybacks.
"While [the] risk/reward assessment presumes ongoing strength, the bias remains to the upside, and we continue to view LULU shares as a solid core holding for growth investors," Duffy adds.
