To The Moon

$Lululemon Athletica(LULU)$ will be releasing the first quarter results of 2024 on Wednesday (05 June). Lululemon have been struggling with their sales amidst competition from cheaper and better quality sports wear.

It has been struggling with low sales for quite some time and earlier in 2024, had to lay off hundreds of employees and close its distribution center. Despite this, the consensus EPS forecast expected is still higher at $2.40, up from $2.28 in the same quarter last year (2023).

But I would like to focus on what is Lululemon outlook for 2024 and 2025 as the low sales might continue and what is their plan and strategy to stay in the competition? Not forgetting that there will be incumbent sportswear startup and companies coming to take on the same pie.

Lululemon Past Earnings Have Been Positive. Can It Continue?

If we look at the past 2 quarter earnings, Lululemon have been showing significant performance as they have beat the EPS estimate and also improved from previous year EPS by at least 20%.

These quarters does not pose the low sales challenges for Lululemon, so will Lululemon continue to adjust its expenditure and continue to appeal to its customer base, or is it time for them to explore some untapped market?

Earnings Volatility Stable and KDJ Looks To Be On Upward Trend

Lululemon score pretty decent on the earnings volatility as it has shown that a slight upside of the stock price is expected, no huge margin gap, but I personally feel that we need to be cautious on Lululemon outlook for 2024.

I am expecting Lululemon might announce further headcount reduction, and if you are thinking of buying Lululemon, you might want to monitor the price action for today (04 June) and tomorrow (05 June) before its earnings, before taking action.

Summary

From what I have observed, though Lululemon have been beating the earnings expectations for the last four quarter, we need to be mindful that Lululemon is facing competition and low sales, there might be possibility of more cost cutting exercise.

These factors could have investors rethinking about their confidence, and hence, we might see some volatility in the stock price.

Appreciate if you could share your thoughts in the comment section whether you think Lululemon would face more cost cutting because of low sales?

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.