Image Source: Mike Mozart
By Brian Nelson, CFA
On December 7, Lululemon (LULU) reported strong third-quarter results for its fiscal 2023, with revenue increasing 19% and comparable sales increasing 14% on a constant-dollar basis. Adjusted earnings per share of $2.53 came in roughly 10% higher than the consensus forecast. We are reinstating coverage of Lululemon with a $470 per share fair value estimate and an Attractive Economic Castle rating. We like Lululemon but we won’t be adding it to any newsletter portfolio at this time. Here is what CEO Calvin McDonald had to say about the quarter in the press release:
This was another strong quarter for lululemon as our innovative product offerings and community activations continued to powerfully resonate with our guests globally. As we enter the holiday season, we are pleased with our early performance and are well-positioned to deliver for our guests in the fourth quarter. I am energized by the significant opportunities ahead, and would like to thank our incredible teams around the world for their continued passion and commitment to our brand.
For the first nine months of its fiscal year, Lululemon hauled in $912 million in operating cash flow, much better than the $79.8 million in cash burn it lost during the same period a year ago. Inventories were slightly down on a year over year basis, to $1.66 billion from $1.74 billion as of October 30 of last year. The company has a debt-free balance sheet and ended the quarter with $1.09 billion in cash and cash equivalents. Looking ahead to all of 2023, management expects net revenue in the range of $9.549-$9.584 billion and adjusted earnings per share in the range of $12.32-$12.42. The midpoint of its earnings outlook was slightly lower than consensus, but we expect a bottom-line beat for the current fiscal fourth quarter in any case.
Please select the image below to download its 16-page stock report.
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Brian Nelson owns shares in SPY, SCHG, QQQ, DIA, VOT, BITO, RSP, and IWM. Valuentum owns SPY, SCHG, QQQ, VOO, and DIA. Brian Nelson’s household owns shares in HON, DIS, HAS, NKE, DIA, QQQ, SCHG, and RSP. Some of the other securities written about in this article may be included in Valuentum’s simulated newsletter portfolios. Contact Valuentum for more information about its editorial policies.
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