Analyst Expectations Ahead of Thursday’s Q2 Report

Key Takeaways

• Athletic apparel company Lululemon unveils Q2 financial results Thursday following market close
• Analyst consensus calls for earnings per share of $1.80 alongside $2.46B in quarterly revenue, marking approximately 1.6% year-over-year contraction
• Shares of LULU have plummeted 42% in 2024, currently hovering near $118.07 against a consensus target of $127.35
• Goldman Sachs reduced its target price from $122 down to $111 while maintaining a Neutral stance
• Multiple indicators including credit card spending, foot traffic metrics, and consumer confidence deteriorated throughout the reporting period

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Athletic wear specialist Lululemon (LULU) prepares to unveil its second-quarter earnings results Thursday evening following the closing bell. Analysts are closely monitoring several key metrics.

Lululemon Athletica Inc., LULU

The Street’s consensus anticipates earnings of $1.80 per share on $2.46B in total revenue for the period. These figures would signal a year-over-year revenue contraction of approximately 1.6%, marking a significant departure from the 6.5% expansion the company achieved during the comparable quarter last year.

Shares are presently changing hands around $118.07, reflecting a steep decline of nearly 42% year-to-date. This performance stands in stark contrast to the S&P 500, which has climbed roughly 11.5% during the identical timeframe.

The consensus analyst price objective stands at $127.35, suggesting modest potential appreciation from current levels. However, the prevailing mood among market watchers entering the earnings announcement remains decidedly cautious.

Investment bank Goldman Sachs maintains a Neutral recommendation on the shares and recently lowered its price objective from $122 to $111. The firm highlighted deteriorating credit card transaction data, weakening consumer confidence readings, and softer foot traffic patterns observed during the quarter.

Goldman further noted that both net purchase intent metrics and net promoter scores experienced additional declines in July, continuing to trail substantially behind peer company averages. This trend persists despite leadership’s implementation of enhanced product offerings and promotional campaigns.

The Seeking Alpha Quant rating system assigns LULU a Sell designation. Both Seeking Alpha’s analyst community and the broader Wall Street analyst base predominantly assign Hold ratings to the equity.

One Seeking Alpha contributor observed that profitability and additional financial indicators are deteriorating, even while top-line growth remains marginally positive. International operations are partially offsetting weakness, though Americas segment revenue continues contracting.

Management’s Outlook Already Telegraphed Weakness

Lululemon provided Q2 forward guidance when releasing Q1 results previously. Management forecasted revenue spanning $2.45B to $2.475B, representing a year-over-year decrease of 2% to 3%. Earnings per share guidance was established at $1.76 to $1.81.

This forward-looking range effectively bracketed existing consensus expectations, which clarifies why Wall Street analysts have exhibited minimal estimate adjustments. Throughout the preceding 30-day window, projections have remained largely unchanged.

The company has fallen short of Wall Street’s revenue projections on multiple occasions throughout the previous two years. Earnings per share performance has proven more reliable, with the retailer exceeding consensus estimates in every instance across the most recent four reporting periods. Revenue beats achieved a 75% success rate.

Industry Competitors Present Conflicting Indicators

Several competing apparel retailers have published results already, providing useful comparative benchmarks. Abercrombie and Fitch delivered 4.8% revenue expansion, surpassing estimates by 1.8%, triggering a substantial 33.8% post-earnings stock surge.

Gap recorded a 2% revenue contraction, falling short of projections by 0.9%, yet shares still advanced 12.9% following the announcement.

LULU has lagged both competitive names over the trailing month, declining 4.5% while the broader apparel sector retreated an average of 3.5%.

Examining the previous three-month period, both EPS and revenue estimates for LULU have received zero upward adjustments, contrasted against 21 downward modifications.

The post Lululemon (LULU) Stock: Analyst Expectations Ahead of Thursday’s Q2 Report appeared first on Blockonomi.

Source: https://blockonomi.com/lululemon-lulu-stock-analyst-expectations-ahead-of-thursdays-q2-report/