Lululemon Athletica inc. (NASDAQ:LULU) will release first quarter fiscal 2014 financial results before the market open on Thursday, June 12, 2014. The company will host a conference call at 9:00 a.m. Eastern time to discuss the financial results.
Wall Street anticipates that the athletic-apparel maker will earn $0.32 per share for the quarter, which is the same as last year's profit of $0.32 per share. iStock expects Lululemon to beat Wall Street's consensus number, the iEstimate is $0.34.
Sales, unlike earnings, are expected to rise a respectable 10.3% year-over-year (YoY). LULU's consensus revenue estimate for Q1 is $381.24 million, which is more than last year's $345.78 million.
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lululemon athletica is a designer and retailer of technical athletic apparel operating primarily in North America and Australia. The Company offers a range of performance apparel and accessories for women, men and female youth. Its apparel assortment, including items, such as fitness pants, shorts, tops and jackets, is designed for healthy lifestyle activities such as yoga, running and general fitness. As of February 2, 2014, it operated 254 stores in the United States, Canada, Australia, and New Zealand.
Predicting a bullish surprise from LULU is no big deal. The company topped expectations for at least 16 consecutive quarters. Typically, the specialty-retailer earned $0.03 more than the street's consensus outlook with a range of 1.35% to 44% more than expected.
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For the most part, LULU's earnings-driven, price sensitivity has mirrored the bottom's line success. Investors pushed Lululemon price higher in the days surrounding 10 of the last 16 quarterly checkups. The price popped an average of 12.31% with a max gain of 24.30% and a minimum of 2.2%. In fact, five of the 10 green reactions were greater than 15%. That's pumpin'. On the flip side, sellers drove the stock lower by an average -6.13%, dropping from -1.3% to -15.3%.
Despite the impressive earnings record, there are some worrisome points heading into Thursday's announcement. According to the company's most recent annual report, cost of goods sold increased 23.63% in 2014 versus revenue growth of 16.11%. The difference compressed gross profit to 52.8% of sales from 55.67% the previous year. That's not healthy for the bottom line.
The balance sheet has a few sore spots, too. Accounts receivable and inventory both grew at a faster rate than sales. The combo could be a sign that customers are struggling to move merchandise, which means discounts and that's bad for margins.
Overall: The iEstimate and Lululemon Athletica inc.'s (NASDAQ:LULU) earnings history suggest another bullish surprise; however, rising costs and possibly more supply than demand add risk to LULU's first quarter report.
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