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lululemon Stock Slips 4% Post Holiday Results: Should You Buy the Dip?
LULUlululemon(LULU) ZACKS·2025-01-23 17:36

Core Viewpoint - lululemon athletica inc. (LULU) has experienced a 4% decline in share price despite raising its revenue and earnings guidance for Q4 fiscal 2024, attributed to strong holiday demand [1] Financial Performance - LULU's shares have increased by 28% over the past three months, outperforming the broader industry growth of 16.3% and the Consumer Discretionary sector's rise of 7.6% [2] - The current share price of 382.82representsa22.1382.82 represents a 22.1% discount from its 52-week high of 491.30 and a 69.4% premium over its 52-week low of 226.01[5]−LULUexpectsQ4fiscal2024revenuestogrowby11−12226.01 [5] - LULU expects Q4 fiscal 2024 revenues to grow by 11-12%, reaching 3.56-3.58billion,anincreasefromthepreviousforecastof3.58 billion, an increase from the previous forecast of 3.48-3.51billion[7]−ThecompanyprojectsfiscalQ4earningspershare(EPS)between3.51 billion [7] - The company projects fiscal Q4 earnings per share (EPS) between 5.81 and 5.85,upfromtheearlierestimateof5.85, up from the earlier estimate of 5.56 to 5.64[8]−A30basispointsincreaseingrossmarginisanticipatedcomparedtoQ4fiscal2023,anotableimprovementfromthepriorguidanceofa20−30basispointsdecrease[9]EarningsEstimates−TheZacksConsensusEstimateforLULU′sfiscal2024and2025EPShasincreasedby0.45.64 [8] - A 30 basis points increase in gross margin is anticipated compared to Q4 fiscal 2023, a notable improvement from the prior guidance of a 20-30 basis points decrease [9] Earnings Estimates - The Zacks Consensus Estimate for LULU's fiscal 2024 and 2025 EPS has increased by 0.4% and 0.5%, respectively, indicating a bullish outlook [10] - The consensus estimate for fiscal 2024 sales and EPS implies year-over-year growth of 9.6% and 12.3%, respectively [11] Long-Term Growth Strategy - LULU's Power of Three X2 growth strategy aims to quadruple international net revenues from 2021 levels and double digital and menswear sales [14] - The company estimates net revenues of 12.5 billion by 2026, significantly up from the 2021 reported figure of $6.25 billion [14] - LULU's strong brand positioning and commitment to high-performance athletic apparel contribute to its competitive advantage [15] - Successful global expansion, particularly in markets like China, has enhanced brand acceptance and customer connection [16] Investment Outlook - LULU's strong holiday results and positive fiscal 2024 outlook inspire investor optimism, positioning the company as an attractive long-term investment [17]