What happened
Shares of lululemon athletica (LULU 1.76%) gained 21.5% in value last month, according to data provided by S&P Global Market Intelligence. Despite the market jitters that weighed on most stocks at the end of 2018, Lululemon stock was resilient, buoyed by robust sales performance over the last year. In early January, the company raised its guidance for the fiscal fourth quarter after stronger-than-expected sales performance over the holidays.
So what
While the S&P 500 is down 4.9% over the last six months, shares of the yoga-inspired retailer are up 15%. In its previous quarterly earnings report in early December, Lululemon showed no signs of slowing demand as possible indicators of a global economic weakening were creeping up during the fall.
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For the fiscal third quarter, revenue grew 21% year over year, fueled by robust growth in direct-to-consumer sales of 44% year over year. However, several companies reported strong sales growth only to be punished by investors for not raising guidance for the upcoming quarter.
Lululemon is not not one of those. After strong sales through the holiday period, management now expects revenue to be in the range of $1.14 billion to $1.15 billion, which is up from previous guidance of $1.115 billion to $1.125 billion. The raised outlook is based on robust comparable-store sales growth in the mid-teens on a constant currency basis during the fiscal fourth quarter.
Check out the latest Lululemon earnings call transcript.
Now what
It's clear Lululemon's momentum is for real. The company is ahead of schedule in growing its men's business to $1 billion in annual revenue by 2020, which is an important initiative to expand the brand's addressable market.
What's more, Lululemon's brand is earning a prestigious place in retail given that management is seeing no pushback from customers on higher-priced merchandise. That is a sign of an incredibly strong brand right now.
