Lululemon’s Stock (LULU) See’s Earnings Boost, as Climb From Lows Continues at Pace

Lululemon stock price (NASDAQ: LULU) has put holders through a turbulent 2024, with a 50% decline from the beginning of the year through to August now seemingly in the rear-view. The stock has since recaptured it's mojo (of sorts) and ha gained 46% over the past 4 months of trading, and up a further 8.36% in the pre-market session off the back of earnings.

Now the firm has reported solid numbers for the third quarter of 2024, highlighted by substantial international expansion and strong performance in China. Despite facing some challenges in the domestic market, the company has managed to boost its financial metrics and position itself for further growth.

In the third quarter, Lululemon's total revenue increased by 9% to reach $2.4 billion against a consensus estimate of $2.36 billion. The adjusted operating margin rose by 70 basis points, bringing it up to 20.5%. Adjusted earnings per share (EPS) also saw a notable increase, growing by 13% to $2.87 per diluted share against an expected $2.72.

International revenues were a standout in this quarter, with an impressive 33% growth. This growth was spearheaded by remarkable performance in the China Mainland market, where revenues jumped by 39%.

Lululemon's product categories also performed well, with men's revenue increasing by 9%, while women's and accessories both saw an 8% rise. The company's gross margin increased by 40 basis points to reach 58.5%, although selling, general, and administrative (SG&A) expenses accounted for 38% of net revenue.

The company ended the quarter with a net income of $352 million, while inventory levels saw an 8% increase. Lululemon's global store count reached 749. In a significant move, the company repurchased $409 million worth of shares in the third quarter, contributing to a total of $1.4 billion year-to-date, and has authorized an additional $1 billion for its share repurchase program.

CEO Calvin McDonald noted that U.S. sales met expectations, and he anticipates stronger product newness in the fourth quarter. However, Lululemon expects a decrease in operating margin for the full year and predicts that inventory levels will grow in the mid-teens by the end of the fourth quarter.