Lululemon Athletica (LULU -3.31%) shareholders are in for a bumpy week. The yoga-focused apparel giant will report its second-quarter results in just a few days, and the stock's soaring price since its last quarterly update means there are high expectations heading into this week's report.

With that backdrop in mind, let's take a closer look at the metrics worth watching when CEO Calvin McDonald and his team announce the Q2 results on Wednesday, September 8.

A young woman holding a yoga pose.

Image source: Getty Images.

Sales checkup

Lululemon's last announcement, back in early June, was packed with good news about the business. Sales had more than doubled at its physical retailing locations even as online volumes remained high. The outcome from those two positive trends was an 88% revenue spike that put Lululemon firmly in growth mode. Sales are up roughly 25% annually over the past two years, which removes some of the noise from temporary store closures in 2020.

Investors are bracing for slower growth this time around, with revenue expected to rise by about 48% to reach $1.33 billion. Look for McDonald and his team to highlight the two-year growth rate again on Wednesday while also commenting on the breadth of the company's merchandising wins.

Its strong performance across apparel categories, demographics, and selling channels powered sales gains that surprised Wall Street in June. Investors are hoping for a similarly strong outing this week.

Inventory and profits

The chain's profits more than doubled last quarter, with rising margins playing a key role in the earnings spike. Lululemon's gross profit margin crossed 57% of sales -- a multi-year high -- thanks to robust demand for premium athleisure apparel and accessories.

LULU Gross Profit Margin Chart

LULU Gross Profit Margin data by YCharts

The company navigated several big cost and shipping challenges last quarter, and we'll find out on Wednesday if it repeated that success in the early summer weeks. Risks to the margin outlook include spiking transportation costs, shipping delays, and quickly changing consumer preferences. McDonald highlighted Lululemon's ability to "strategically manage" those difficulties last quarter.

And CFO Meghan Frank added that the chain's inventory holdings were strong. Look for these factors to support a continued march higher for metrics like gross and operating profit margins.

Looking ahead

Lululemon has broken from many peers by issuing a detailed short-term outlook in this era of elevated consumer demand swings. Heading into Wednesday's report, most investors who follow the stock expect the company to predict that sales will land at $5.94 billion for the full year, or slightly higher than the top end of the forecast range that management issued back in June.

The stock price's moves over the next week or so will depend mostly on whether Lululemon nudges up its 2021 outlook to at least $6 billion, as Wall Street is expecting. But even a disappointing short-term forecast shouldn't deter investors from holding this attractive business.

Lululemon has a long runway for growth ahead as it pushes into new geographies and taps new demographics like menswear. And its earnings gains should be amplified by rising margins that come mainly from its steady stream of innovative product releases. That's a formula for market-beating returns for investors who simply hold the retailer through volatile periods like the one that's likely in the coming week.