Lululemon Athletica (LULU) stock is trading higher Thursday after the athletic apparel retailer beat top- and bottom-line expectations for its fiscal first quarter and announced a $1 billion increase to its share repurchase program.
In the quarter ended April 28, Lululemon said its net revenue increased 10.4% year-over-year to $2.2 billion, driven by a 35% rise in international net revenues. Additionally, LULU disclosed n 11.4% jump in earnings to $2.54 per share.
"In the first quarter, we saw strong momentum in our international markets, demonstrating how our brand continues to resonate around the world," Lululemon CEO Calvin McDonald said in a statement. "Guests responded well to our product innovations across categories, and we are pleased by the progress we are making to optimize our U.S. product assortment."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The results came in ahead of analysts’ expectations. According to Yahoo Finance, Wall Street was anticipating revenue of $2.19 billion and earnings of $2.38 per share.
For the second quarter, Lululemon said it expects net revenue in the range of $2.4 billion to $2.42 billion and EPS to arrive between $2.92 to $2.97. This is slightly below the $2.45 billion in revenue and $3.01 in earnings per share analysts' are projecting.
For the full year, LULU said it continues to expect net revenue in the range of $10.7 billion to $10.8 billion. However, it now expects earnings to arrive between $14.27 to $14.47 per share, up from its previous range of $14 to $14.20.
Lululemon also said its board of directions approved a $1 billion increase to its stock buyback program, bringing the total remaining to $1.7 billion, or 4.2% of its current market cap.
Stock repurchases, also known as buybacks, are another way for corporations to boost value for shareholders. As Kiplinger contributor Mark Hake explains in his piece on "What Is a Stock Buyback," a company "that buys back its shares will produce a higher stock price because as its shares count falls, it forces the price higher."
Hake goes on to explain "that effect produces more value for shareholders, as they pay no taxes on this unrealized gain (until they sell shares)."
Is Lululemon stock a buy, sell or hold?
The consumer discretionary stock is down more than 38% for the year to date, but analysts remain upbeat. According to S&P Global Market Intelligence, the consensus analyst target price for LULU stock is $405.47, representing implied upside of more than 30% to current levels. Meanwhile, the consensus recommendation is a Buy.
CFRA Research analyst Zachary Warring maintained a Strong Buy on LULU stock after the earnings release.
"Although the company is experiencing growth deceleration in the Americas, we continue to believe LULU is the top player in apparel retail and expect an acceleration in growth across the Americas and continued success in China (+45% in Q1) and internationally," Warring wrote in a note to clients.
The analyst has a $435 price target on LULU stock, representing implied upside of nearly 40% to current levels.
Related Content
-
Kohl’s to Close 27 Stores in March 2025 — Is Your Location on the List?Kohl’s is closing 27 stores this Saturday as part of its 2025 restructuring plan. Find out which locations are affected and why they’re closing.
-
Stock Market Today: It's Going to Stay Choppy for StocksAuto-focus can show us a lot about uncertainty on the ground and in the stock market.
-
Stock Market Today: It's Going to Stay Choppy for StocksAuto-focus can show us a lot about uncertainty on the ground and in the stock market.
-
Revocable Living Trusts: The Good, the Bad and the UglyPeople are conditioned to believe they should avoid probate at all costs, but when compared with living trusts, probate could be a smart choice for some folks.
-
How to Plan for Retirement When Your Child Has Special NeedsWhen your child has special needs, your retirement plan should include a plan for when you'll no longer be able to care for them yourself. A five-step guide.
-
Stock Market Today: Auto Tariffs Send Stocks LowerThe main indexes snapped their win streaks after the White House confirmed President Trump will talk about auto tariffs after the close.
-
Tax Advantages of Oil and Gas Investments: What You Need to KnowTax incentives allow for deductions and potential tax-free earnings — benefits accessible only to accredited investors in small producer projects.
-
Charitable Contributions: Five Frequently Asked QuestionsMake the most of your good intentions by understanding the ins and outs of charitable giving. A good starting point is knowing what's deductible and what isn't.
-
Financial Leverage, Part Two: Don't Say We Didn't Warn YouA lesson in how highly leveraged investments can benefit the first movers and crush the next round of buyers.
-
Taxes in Retirement: What ESOP Participants Need to KnowMost Employee Stock Ownership Plans (ESOP) participants transfer company stock to an IRA starting around age 55, so taxes on that money have been deferred.
