What happened
Shares of yoga-wear retailer Lululemon Athletica (LULU 1.31%) are adopting the "forward-racing dog" pose on Wednesday afternoon, up 12.6% as of 1 p.m. ET after the company reported blockbuster earnings for the company's fiscal fourth quarter of 2021.
Heading into Q4, analysts had predicted Lululemon would earn $3.28 per share on $2.1 billion in total sales for the quarter. Lulu both nailed that sales target and earned $3.37 per share (albeit pro forma).
Image source: Getty Images.
So what
Those sales were up an impressive 23% year over year, by the way, while earnings under generally accepted accounting principles (GAAP) -- $3.36 per share, just a penny less than pro forma profits -- accelerated 33%. Helping to deliver this outsize difference between sales growth and earnings growth were high-margin direct-to-consumer sales (up 49% -- twice as fast as overall sales growth), resulting in a 120 basis point boost to operating profit margins (27.7%).
For all of 2021, Lululemon sales grew 42% (so Q4 actually represented something of a slowdown). Operating profit margin averaged 21.3% for the year (so Q4 was relatively more profitable). Overall, earnings for the year came to $7.49 per share -- up an astounding 66% year over year.
Now what
And the good news looks likely to continue into 2022. For the first quarter of the new year, Lululemon Athletica is guiding investors to expect more than $1.5 billion in sales -- growth of at least 24%, and faster than Q4's performance. Earnings could range from $1.38 to $1.43 per share for the quarter.
For all of fiscal 2022, expect sales to grow at least 20%, and perhaps as much as 22%, to somewhere between $7.5 billion and $7.6 billion. Earnings should come in between $9.15 and $9.35 per diluted share.
No wonder investors are pleased.
