Lululemon (LULU) Q1 Earnings Report Preview: Key Points to Watch

Lululemon, the athletic apparel retailer, is gearing up to release its first-quarter earnings report after the market closes tomorrow. Following last quarter’s performance, where it exceeded revenue expectations by 0.8%, logging revenues of $3.61 billion with a 12.7% year-on-year increase, investors are eager to see this quarter’s results. While the company outperformed analysts’ EBITDA estimates last quarter, its EPS guidance for the upcoming quarter fell short of expectations. This mixed performance raises the question of whether Lululemon is a buy or sell leading up to the earnings release. Analysts are predicting a 7.2% year-on-year revenue growth to $2.37 billion this quarter, reflecting a deceleration from the 10.4% increase seen in the corresponding period last year. Adjusted earnings of $2.60 per share are also expected.

Market analysts, in the past month, have mostly upheld their estimates for Lululemon, signaling confidence in the company’s trajectory heading into the earnings announcement. Lululemon has a history of exceeding Wall Street’s revenue estimates, having missed them only once in the last two years, averaging a 1% beat. Observing Lululemon’s peers in the apparel retail sector, some companies have already shared their Q1 results, providing insights into potential industry trends. Urban Outfitters saw a 10.7% year-on-year revenue uptick, surpassing estimates by 2.5%, while Gap’s revenues rose by 2.2%, exceeding expectations by 1.3%. Following these results, Urban Outfitters’ stock rose by 23%, whereas Gap’s shares experienced a 20.1% decline.

Investors have expressed favorable sentiment towards apparel retailers, with the sector’s stock prices rising by an average of 13.9% in the last month. During the same period, Lululemon’s stock surged by 24.1%, setting the stage for its earnings release. The average analyst price target for Lululemon stands at $334.95, slightly below the current share price of $335.95. As the market anticipates Lululemon’s results, investors keep an eye on whether it will continue its positive momentum.

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