Lululemon has announced its third-quarter earnings report for 2021 and the performance looks beyond amazing with the company beating all primary earning metrics. But despite that, the stock has taken a huge hit because of the company’s possible earnings miss in the upcoming quarter due to its drop in sales of in-home fitness device “Mirror”.
Let’s look into the report numbers to see how the company has performed in the past quarter, before that here is an informative intro about Lululemon that I would not want to skip.
Wikipedia snippet about Lululemon: Lululemon Athletica, styled as Lululemon Athletica, is a Canadian multinational athletic apparel retailer domiciled in Delaware and headquartered in Vancouver. It was founded in 1998 as a retailer of yoga pants and other yoga wear and has expanded to also sell athletic wear, lifestyle apparel, accessories, and personal care products. The company has 491 stores internationally and also sells online.
Lululemon was founded in 1998 by Chip Wilson in Vancouver, British Columbia, with its first standalone store opening in November 2000. Wilson created the name to have many L’s so that it would sound western to Japanese buyers, who often have difficulty pronouncing the letter. He later remarked that he found it “funny to watch [Japanese speakers] try and say it”. End of the snippet.
Now, back to the topic of this post, and down below are the numbers.
- Earnings per share: The company has made earnings per share of $1.62 against the $1.41 expectation and prediction of wall street analysts. The margin of difference in this metric is very good to ensure the value investing aspect of the company and its business.
- Revenue: Lululemon has generated quarterly earnings of around $1.45 billion U.S. dollars in comparison to the expectation of only $1.41 billion U.S. dollars by the wall street investors. Once again, the margin of difference is comfortably good for a quarterly performance of a business.
But, after all this, the stock was having a bad time since the company lowered its sales expectation of in-home fitness device Mirror for the last quarter of this year.
Based on the report on lowering sales expectations I can understand the reaction from investors. But sometimes a company/business has to go through a tough time like this to figure new things out and come back with more innovation.
I’m pretty sure that Lululemon is going to have a good business in the time frame of the upcoming three to six quarters and the wall street investors should wait for some time and buy back the stock at a good enough dip to make use of this drop in price opportunity.
Doing so can easily help the investors make a hefty return on investment in the next four to five quarters.
Thank you for reading this, and God Bless Everyone.
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