I've said it before, and I'll say it again: Board the lululemon athletica
The yoga highflier is raising its guidance for the current quarter amid strong holiday sales, brought to you by the polarizing inventory buildup that's been the subject of debate lately. lululemon now expects revenue in the fourth quarter to be between $358 million and $363 million, up from the prior range of $327 million to $332 million.
Diluted earnings per share should be in the ballpark of $0.47 to $0.49, compared with the previous guidance of $0.40 to $0.42. Comparable-store sales on a constant dollar basis are expected in the low-to-mid 20s, better than the low-to-mid teens guided during last quarter's results.
Further vindicating the apparel maker is CEO Christine Day's comment: "Our work throughout the year building our inventory position is driving our success in the fourth quarter. Guests have responded exceptionally well to the robust assortment and bright color palette for holiday, and momentum continues with the new spring product offerings."
Remember when I said, after the latest earnings release, "I'm not concerned about the inventory, since I expect all those luon Astro Pants to get a move on once the holidays roll around"? Well, the bumped-up guidance speaks for itself.
The figures also handily top analyst consensus estimates, which call for $333.7 million in sales and $0.42 per share in profit. The quarter closes at the end of the month, but a blowout is clearly in the pipeline. lulu loyalists are snapping up new digs, and I'm encouraged that comparable-store sales are reclaiming the 20% threshold. One of the few downsides recently was the prospect of comps trending lower from "spectacular" to just plain "great."
Other apparel retailers like Gap
On the margin side, wholesalers like Nike
If you're looking for a retail growth play to round out your portfolio, lululemon is the way to go.
Still need another retail pick to consider? You're in luck, because we've just released a brand-new special free report directly from the desk of our chief investment officer that details The Motley Fool's top stock for 2012. The company is positioned to cash in on the explosive growth in emerging markets, and its business model resembles two retail titans you probably visit each week. Check it out now -- it's free.
Fool contributor Evan Niu owns shares of lululemon athletica, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Under Armour, Gap, and lululemon athletica. Motley Fool newsletter services have recommended buying shares of Nike, lululemon athletica, and Under Armour and creating a diagonal call position in Nike. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
More from The Motley Fool
8 Reasons to Buy Lululemon Athletica Stock
The yoga apparel specialist is gaining momentum, and there's plenty of demand for athletic apparel around the world.
Why lululemon athletica Inc. Stock Popped 17.4% in December
The yoga apparel leader delivered a stellar quarterly performance, and offered refreshing guidance for the holiday quarter.
lululemon athletica Price Target Hiked After Holidays: What You Need to Know
Merrill Lynch urges investors to get in before the numbers come out.