lululemon athletica (LULU 1.55%) reported first-quarter results after the market close on June 3. The athleisure retailer handily beat analysts' expectations, delivering revenue growth that nearly doubled last year's first-quarter total.
Recall, however, that the year-ago period included strict lockdowns from the early phases of the pandemic when consumers closed their wallets to nonessential items like clothing, but revenue was up even when compared with 2019 levels.
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Not afraid to spend
Lululemon reported revenue growth of 88% year over year. More impressively, revenue was up 57% from the first quarter of fiscal 2019, long before COVID-19 became a global emergency. It may be a little early to say, but it looks like Lululemon has already bounced back from the pandemic.
Here's what CEO Calvin McDonald had to say regarding the latest results:
Our first-quarter results reflected strength across all drivers of growth, fueled by the continued expansion in our e-commerce business and a rebound in brick-and-mortar stores. Our strong performance across categories, channels, and geographies demonstrates the momentum and strength of lululemon as we shift into the new normal.
As this earnings season goes on, it's becoming evident that consumers have been eager to spend. Fueled by stimulus checks that hit bank accounts in March and April, and feeling comfortable leaving their homes again, people are going on shopping sprees. That's helping retailers from Lululemon to Macy's to Nordstrom, just a few of the beneficiaries of a splurging public.
The enthusiasm from customers has allowed Lululemon to sell more inventory at full price. That led its gross profit margin to expand by 320 basis points from 2019 levels. Indeed, Lululemon was so pleased with the results that management is raising expectations for the rest of fiscal 2021.
For the year, Lululemon now expects net revenue to be in the range of $5.825 billion to $5.905 billion (up about 5% at the midpoint), and earnings per share (EPS) should land between $6.52 to $6.65 (up 7% at the midpoint).
What this could mean for shareholders
Lululemon became yet another company that beat expectations for the quarter and raised guidance for the rest of the year. The company's products are clearly a favorite of consumers as they continue to look to Lululemon for their athleisure needs. Indeed, over the last decade, Lululemon has grown revenue at a compound annual rate of 20%.
The expanding top line is allowing Lululemon to leverage its fixed costs and increase profits, with earnings per share growing at a similar rate over the past 10 years. As it continues to expand into menswear and new markets, Lululemon is coming out of the pandemic poised to continue delivering excellent results for investors.
