Why Lululemon Athletica Stock Soared to a Record High Today | The Motley Fool

What happened

Shares of Lululemon Athletica (NASDAQ:LULU) leaped 10.5% to a new closing high of $420.71 on Thursday, following the release of the athletic apparel retailer’s second-quarter results. 

So what

Lululemon’s net revenue surged 61% year over year to $1.5 billion, as shoppers returned to its stores in droves. Sales at its company-operated stores rocketed 142% to $695.1 million, marking a sharp rebound from its pandemic lows when coronavirus-related store closures weighed heavily on its results. 

“Our performance in Q2 was driven by a strong response to our product offering, improving productivity in our stores, and sustained strength in e-commerce,” CFO Meghan Frank said in a press release.

Investors bid up Lululemon’s stock price following its impressive second-quarter performance. Image source: Getty Images.

Better still, Lululemon is becoming more profitable as it scales its revenue base. Its gross and operating margins improved 3.9 and 6.3 percentage points, respectively, to 58.1% and 20.1%. The retailer’s operating income, in turn, soared 134% to $291 million.

All told, Lululemon’s adjusted earnings per share increased 123% to $1.65. That was well above Wall Street’s estimates for adjusted EPS of $1.19. 

Now what

These strong results prompted Lululemon to boost its full-year financial outlook. Management now expects the company to generate net revenue of $6.19 billion to $6.26 billion and adjusted earnings per share of $7.38 to $7.48 in fiscal 2021. That’s up from a prior forecast for revenue of $5.825 billion to $5.905 billion and adjusted EPS of $6.73 to $6.86. 

“While we continue to navigate the COVID-19 environment, including supply chain headwinds, I’m excited with our momentum as we head into the second half of the year and pleased to be able to increase our guidance,” Frank said.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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