Lululemon Athletica (NASDAQ:LULU) investors might be in for some cheery news in just a few days. The athletic apparel specialist reports its fiscal third-quarter results right in the middle of the holiday shopping crush.

The announcement covers the three months through late October, which likely included strong sales and earnings growth as shoppers enthusiastically visited Lululemon's stores and e-commerce sites. Management also might have positive comments to make about the crucial fourth quarter that began in November.

A mother and daughter practicing yoga together.

Image source: Getty Images.

With that big picture in mind, let's look at three major metrics to follow in the report, set for Thursday, Dec. 9.

1. Two-year sales trends

The main challenge will be cutting through the noise in the short-term growth picture. Revenue gains are expected to slow to roughly 30% in the third quarter compared to 61% last quarter. But zoom out, and the growth picture looks much brighter. Lululemon said back in September that two-year sales trends, which smooth out the impact of store closures in early 2020, are up 28% compared to about 19% before the pandemic struck. Look for CEO Calvin McDonald and his team to highlight any changes in that two-year pace on Thursday.

Digging deeper, Lululemon should show strength in its digital selling channel even as customer traffic returned to stores. The chain is also targeting new growth niches like menswear. Success in these areas might allow Lululemon to outperform expectations again following its surprisingly strong results three months ago.

2. Gross profits

Management warned at the start of the quarter that inventory challenges might hurt the business in the second half of fiscal 2021. Supply chain bottlenecks and spiking prices threaten results in two ways.

Profitability might suffer as Lululemon pays more for transportation and splurges on air freight over traditional shipping options. Meanwhile, the growth picture would be harmed if management can't secure enough of the right kind of inventory, both online and in stores.

LULU Gross Profit Margin Chart

LULU gross profit margin data by YCharts.

Stumbles in these areas would show up most clearly in gross profit margin. Investors will be watching to see whether that metric falls from the multiyear high it set of 58% of sales last quarter. Operating margin was an industry-trouncing 20% of sales, too, and might take a small step backward due to supply chain issues.

3. Holiday outlook

The biggest question going into the report is around Lululemon's fourth-quarter outlook. Heading into Thursday's announcement, management is targeting fiscal 2021 sales of between $6.1 billion and $6.3 billion. That forecast stood at $5.9 billion earlier in the year, and shareholders are hoping to see another forecast upgrade this week. The earnings picture could also shift, with annual profits currently set to jump to between $7.38 and $7.48 per share.

Both those sales and profit figures are much higher than Lululemon was achieving in 2019, when its annual sales footprint was $4.4 billion. Coming out of the pandemic slump just two years later, investors are looking for yearly sales to soar past $6 billion.

There's lots of room to build on that number, too, as the chain pushes into new geographies and attacks attractive clothing niches like outerwear and menswear. Its product innovations will be crucial to achieving those growth goals. But the good news is that the chain is on pace to end 2021 with a huge base of engaged shoppers, who seem eager to support the brand as it branches out into more segments within the athleisure industry.

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