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Saturday, May 28, 2022

Just How Strong Are Lululemon Athletica Inc. (LULU) Financial Foundations?

Last week, Sportswear seller Lululemon Athletica Inc. (NASDAQ: LULU) reported that its sales had increased by nearly 90% year over year. According to analysts, the retailer may be on the verge of completing the recovery after the pandemic after exceeding the Wall Street analysts’ expectations.

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Revenue for Lululemon Athletica’s recent quarter increased 88 % compared to the same period last year. 2020 will likely be a good year to compare, as many retailers experienced a sharp decline in sales during the beginning of the pandemic. Yet Lululemon Athletica’s results were 57% higher than pre-crisis levels in 2019. A strong quarter of e-commerce growth combined with the opening of retail stores and shopping centers contributed to the company’s explosive growth. Additionally, sales contributed to stimulus measures in the US, which allowed consumers to spend more freely. The company emphasized that nearly all of the goods were still being sold at full price. The result was an increase in gross profit compared to the level of 2019. In addition to other factors, the company’s gross profit increases due to a higher proportion of direct sales.

 Lululemon Athletica Inc. (NASDAQ: LULU) fiscal year 2021 outlook improves. The company now expects its revenues to range from $ 5.825 billion to $ 5.905 billion, and its earnings per share range from $ 6.52 to $ 6.65. Over the decade, Lululemon Athletica has increased its income by about 20% on average every year. This momentum can be maintained in the future by extending their reach into the menswear segment as well as increasing their sales outside the United States.

The stock of Lululemon Athletica Inc. (LULU) gained 0.79% to close at $329.80 in the last trading session. Shares of the company were trading between $327.505 and $332.76. The company traded 0.67 million shares, which was below its daily average of 1.32 million shares over 100 days. LULU’s shares have gained 3.92% in the last five days, while they increased 2.41% in the previous month. The current price-to-earnings ratio of the stock is 61.23, and the price-to-book ratio is 16.29. Furthermore, the price to cash flow ratio was 46.13.

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