Canadian athletic apparel retailer Lululemon Athletica inc. (LULU) will report earnings on June 12. What to expect from this event?
Why is it important?
You can read a lot of positive things about Lululemon here and there. Sport lifestyle is getting more and more popular and so do the fashionable clothes that are associated with it. Combine this favorable market environment with the firm’s proactive approach and you’ll get the idea why everyone likes Lululemon.
Indeed, expectations are quite positive. According to the consensus forecast, the company’s EPS have increased by 29.1% y/y in the previous fiscal quarter, while revenue added 16.5%.
The company has an impressive and well-thought-out strategy for 2020. It involves product innovation, building more stores in North America, broadening of digital business and international expansion. So far, Lululemon’s progress is fine. It has managed to increase both online and online sales. The combination of an emphasis on e-commerce and efforts to win big markets in Europe and Asia means that Lululemon’s growth potential is big.
Although the stock isn’t cheap and has already rallied much this year, profitability and growth may keep pushing it up without major setbacks.
The stock has been trading in a long-term uptrend outperforming the market. In April, it reached all-time highs just below $180. The price now needs to overcome the resistance line at $175.50. If it succeeds, the next stop will be at $180. The dynamic development of the company this year may bring the stock to $190. Support lies at $171.20 (50-day MA) and $166.50 (trendline support).