lululemon(LULU) The Motley Fool·2025-03-28 17:51Core Viewpoint - Lululemon Athletica's shares fell significantly following the release of its fiscal fourth-quarter earnings, which, despite beating expectations, provided disappointing guidance for future growth amid concerns over consumer spending and macroeconomic pressures [1][4]. Financial Performance - In the fiscal fourth quarter ended on February 2, Lululemon reported revenue of 6.14, up 16%, both exceeding expectations [2]. - The reported revenue growth was partially inflated due to an extra week in the fourth quarter compared to the previous year; without this, revenue growth would have been approximately 8% [2]. Future Guidance - Management forecasted a deceleration in growth for the first quarter, expecting growth between 6% and 7% [3]. - For the full year 2025, Lululemon projected revenue between 11.3 billion, indicating growth of 5% to 7%, or 7% to 8% when excluding the impact of the extra week in 2024 [3]. Market Concerns - The growth forecast, while not overly negative given current macroeconomic conditions, fell short of analysts' expectations, raising concerns about the sustainability of growth, particularly as U.S. comparable store sales were flat and much of the growth was driven by China [4]. - CEO Calvin McDonald highlighted consumer caution due to inflation and economic concerns, leading to slower traffic in the U.S. retail sector [4]. Valuation and Investment Considerations - Following the stock's decline, Lululemon trades at 19.5 times the current year's guided earnings expectations of $15.05, which is at the lower end of its five-year forward P/E range, historically averaging around 30 times [5]. - The company is now more mature, which may justify a lower valuation multiple; however, its near-term success will depend on U.S. consumer sentiment and China's willingness to purchase North American apparel brands [6].