Ever heard of the saying, “more than just a pretty face”? Lululemon Athletica (NASDAQ:$LULU) is a leading competitor in the athleisure retail space, and revealed a more than impressive earning report yesterday.
The company attributed much of its revenue growth to its expansion in the men’s business and online warehouse sale that single-handedly contributed 14% points to the e-commerce comparable sales figure.
To put it into perspective, the company trades at around 24 times the forward earnings multiple. That number well outperforms its competitors. The brand’s equity is also way ahead of its store footprint, granting Lulu the possibility for mass expansion. As the company hopes to leverage more of its SG&A costs, enhance website conversions, analysts expect operating margins to be 20% by FY2020. That means Lululemon will outperform the entire market in the long run.
Q2 Review:
- Net sales increased by 13% to $581 million
- Sell-throughs upwards of 20% in both men’s and women’s pants categories
- Adjusted gross margins improved 220 basis points
- Lower product costs and pricing gains offset markets during the warehouse sale
- The company projects to see $4 billion in sales by FY2020
All in all, it would be a mistake to call Lululemon just another retailer. The Canadian brand leverages its experiential element to create loyal customers while controlling price power, tapping into the popular athleisure space. If you are looking for a growth stock, Lulu is a top contender.
Featured Image: twitter
