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Lululemon Shares in Correction Territory After Earnings

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Lululemon  (LULU)  shares were cratering Thursday after the company missed revenue and earnings estimates Thursday. The stock was hot into earnings, which also showed the company did not issue guidance or same-store-sales for the reported quarter. 

The stock was up 32% year-to-date, up 123% from its mid-March low and trading at 69 times forward one-year earnings, a high valuation even for the growth company. 

After earnings, the stock fell 7% to $284 a share in post-market trading, after losing 4.68% in regular hours. If the stock opens at its current level Friday morning, it’s in correction territory, down far more than 10% from its Wednesday closing price. 

Here were the results against Wall Street expectations: 

  • Rev: $652M v. $692M (actual: -17% year-over-year)
  • Operating Margin: 5% v. 6.3% (Last year: 16.4%) 
  • EPS: $0.22 v. $0.23 (-70% YoY) 

The company did not show same-store-sales, which were expected to be negative 20%. "The Company believes total comparable sales and comparable store sales are not currently representative of the underlying trends of its business. The Company does not believe these metrics are currently useful to investors in understanding performance, therefore it has not included these metrics in this press release,' Lululemon said in a press release. 

Direct-to-consumer revenue, some of which is digital, rose 68%. 

The company said the coronavirus caused the rough quarter, but that it has reopened many stores. But management did not give guidance because of lack of visibility given the virus, which has broken out in several states in the past few weeks, causing the broader stock market to tank this week. 

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