Shares of Lululemon Athletica (NASDAQ:LULU) are up almost 8% in premarket trading Wednesday after the company reported better-than-expected Q4 adjusted EPS and released an upbeat Q1 revenue forecast.
The apparel retailer reported a fourth-quarter adjusted EPS of $3.37, up from $2.58 in the year-ago period and beating the consensus estimates of $3.27 per share. The company reported EPS of $3.36 for the period, up from $2.52 per share in the year-ago quarter.
Net revenue came in at $2.13 billion, up 23% YoY and almost in line with the analyst expectations of $2.14 billion.
Direct to consumer (DTC) revenue jumped 16% in the quarter to top the analyst estimates of +11.9%. Total comparable sales at constant currency rose by 22%, compared to +20% YoY and consensus estimates of +25.1%.
For the first quarter, Lululemon Athletica expects EPS in the range of $1.38 to $1.43, beating the analyst estimates of $1.27 per share. The retailer expects Q1 net revenue of $1.53 billion to $1.55 billion, above the consensus projection of $1.27 billion.
For the full fiscal 2022, Lululemon expects EPS in the range of $9.15 to $9.35, topping the expected $9.11 per share. Net revenue for FY2022 is expected to range between $7.49 billion and $7.62 billion, beating the expected $7.21 billion.
The company's board also approved a new stock buyback program of up to $1 billion.
Goldman Sachs analyst Brooke Roach reiterated a Buy rating as better than feared results showed LULU has the best-in-class brand momentum.
We come away from F4Q with improved conviction in LULU's several drivers of durable growth that enable the company to gain market share despite tough compares. These include core product momentum, category extension (footwear / golf / tennis), faster store rollout, and ongoing strength in digital. We anticipate more detail on several of these drivers, as well as the margin opportunity for key business lines (footwear / international) at the company's April 20th Investor Day. On balance, we continue to believe that LULU's best-in-class brand momentum will enable the company to deliver healthy growth in EPS despite industry-wide macro challenges (including freight / supply chain), Roach wrote in a client note.
Morgan Stanley analyst Kimberly Greenberger is incrementally positive on LULU following results.
We are impressed with the acceleration in the business following management trimming initial 4Q21 guidance to the low end of its previous range in early January as a result of higher-than-expected freight costs & Omicron impacts to store capacity & traffic, Greenberger wrote in the report.