Investors have some big questions heading into lululemon athletica's (LULU -0.98%) earnings report in just a few days. The retailer overcame temporary store closures to log solid growth through fiscal 2020. Shoppers enthusiastically turned to its e-commerce platform in the pandemic's early days and kept spending as the athleisure industry boomed late last year.

Lululemon's stock price hasn't moved higher after its blowout fiscal fourth-quarter report, which means investors might see a volatile trading week ahead if the chain outperforms expectations again. With that big picture in mind, let's look at some trends to follow in Lululemon's report on Thursday, June 3.

A young woman holding a yoga pose.

Image source: Getty Images.

Stretching for the target

CEO Calvin McDonald and his team issued a bullish outlook for the quarter in late March, saying that revenue should jump to $1.1 billion compared to $652 million a year earlier. Yes, that 69% spike would be driven mostly by pandemic-related weakness in early 2020. But hitting that figure would still mark impressive growth over the $782 million first-quarter result the company achieved two years ago.

The broader story is about market share growth in a booming industry niche. Lululemon has credited valuable competitive assets like its e-commerce platform, popular brand, and steady pipeline of apparel releases for helping it outpace rivals like Nike through the past year. We'll find out on Thursday if the yoga apparel specialist was able to extend its market share momentum into early 2021.

New niches

Lululemon came into the pandemic crisis with an unusually prominent digital sales channel, and that lead allowed it to cash in on shopper behavior changes. E-commerce landed at 52% of total sales last quarter compared to 33% a year earlier.

That success combined with a string of popular product launches to drive adjusted operating margin up to 27% of sales in late 2020. Lululemon is looking to get back to annual growth on this metric, which had been expanding for several consecutive years before 2020. A weaker margin, on the other hand, might imply bloated inventory or stumbles in the chain's competitive push into new demographics like menswear.

Aiming for $6 billion

A lot has changed since executives issued their first 2021 outlook, and so investors might see an update to that forecast on Thursday. Heading into the report, Lululemon is targeting $5.6 billion of sales this year to mark a 25% increase from 2020. Sales grew 10% last year, for context, and expanded by 22% in the year before, which wasn't affected by the pandemic.

The stock's weak performance in 2021 suggests that Wall Street pros don't think Lululemon can boost sales at such a strong clip while expanding profitability in a competitive industry. But I wouldn't bet against the retailer on this score. Instead, a few factors, like international sales, its seasonal store strategy, or hit new product introductions, might allow Lululemon to beat that aggressive growth outlook.

Sure, the chain would be hurt by an industry slowdown if consumers decide to refocus spending in areas like travel and dining as the U.S. reopens. Yet that's no reason to avoid owning this attractive business today.