Lululemon (LULU) Earnings Today: Can the Yoga Apparel Company Regain its Balance?
Lululemon (LULU), the athletic clothing retailer synonymous with yoga apparel, reports earnings after Thursday’s close.
Consensus estimates come in at $1.67 for earnings per share (EPS) against $2.60 a year ago (-35.7%), while revenue is forecast at $2.43B vs. $2.37B year-over-year (+2.6%), according to Zacks.
Lululemon’s turnaround efforts are likely to be a major point of interest for investors. During its last earnings call in March, CFO Meghan Frank highlighted the company’s efforts to shore up sales by introducing new products and reducing markdowns. Last quarter, comparable sales grew by 3% overall despite a 1% decline in the Americas. Executives said they are looking for 20% growth in China sales this year and expect strength in other Asian markets including South Korea.
But with new CEO Heidi O’Neill, a former Nike (NKE) exec, not starting until September, Jefferies analysts write that “any meaningful reset in product, merchandising, or brand, is unlikely until at least Spring 2027, with additional time required to decide whether it was the right strategy.” Other analysts have also taken a dimmer view in recent days; Evercore ISI and Bernstein cut price targets to $130 and $170, respectively, keeping in-line ratings. UBS and Piper Sandler also lowered their targets.
Athletic apparel stocks have fared poorly year to date with LULU down -39%, while Nike is off by -31%, On Holdings (ONON) is down -19%, and Adidas (ADDYY) is lower by -5%.
Struggles track back to the beginning of the U.S. trade war. The U.S. imports about 97% of clothing and shoes purchased by consumers, according to the International Trade Administration. This equates to about $80B per year in goods sensitive to inflation and trade tensions.
Lululemon’s public wrangling with founder Chip Wilson may not have helped. Last week, Wilson agreed to an 18-month non-disparagement agreement and other provisions and dropped a proxy battle. In addition, appointees he suggested will become board members.
LULU shares hit a 52-week low of $116.63 on May 20, with a roughly 8% bounce since. Price remains stuck in a downward-sloping channel shape that began with the December post-earnings highs of $225.98, with a matching bearish trajectory showing in the Relative Strength Index (RSI) that sits near the 39 handle. The 5-day and 21-day Exponential Moving Averages come together roughly near $130 as well, giving a potential resistance confluence. The yearly Volume Profile study shows a heavy trading activity node from about $160 to $180, with the Point of Control coming in near $169 and representing a notable upside area of potential resistance. Meanwhile, the expected move for the Jun. 5 weekly options expiration that will capture earnings comes in at +/-11.5 (9.1%), which suggests that new 52-week lows of around 114.50 could be possible.
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