Buy Lululemon Stock Dip, Jim Cramer Says
Lululemon stock is feeling the burn after the athleisure brand and retailer reported earnings after the bell Thursday.
Expectations were high heading into earnings with the stock up 32% year to date and trading at 69 times forward one-year earnings. And for once Lulu proved a little out of shape, reporting adjusted earnings per share of 22 cents versus expectations of 23 cents per share. The result marked a 70% decline year over year.
Revenue of $652 million also missed expectations of $692 million and fell 17% from the same quarter last year.
Like many other non-essential retailers, the majority of Lululemon retail locations were closed amid the coronavirus pandemic with stores beginning to open on May 3. As of June 10, around 295 of 490 total stores had reopened, according to Statista.
Digital sales proved to be one highlight with direct to consumer net revenue increasing 68%. "Our strong digital business demonstrates the strength of our guest connection and the long-term opportunity to create further Omni experiences going forward," CEO Calvin McDonald said in the earnings release.
Despite a rough quarter and not providing forward-looking guidance, Lulu stressed it remains confident in its long-term plans for growth going forward.
Should investors be confident in the stock?
Jim Cramer said Lululemon is a case where investors will want to buy any dip, and this could be your opportunity. Catch why in the video above.