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Lululemon’s shares jump on earnings beat

Friday, June 07, 2024

Today’s headlines

What’s happening: Shares of Lululemon Athletica surged on Thursday, after the company released results for its first quarter.

What happened: The athleisure apparel maker posted better-than-expected sales and earnings for its latest quarter.

Lululemon raised its full-year earnings forecast and announced a significant increase to its stock repurchase program.

How were the results: The company reported a low single-digit increase in sales for the first quarter.

  • Revenues grew by 10% year-over-year to $2.21 billion, topping consensus estimates of $2.19 billion.
  • Earnings came in at $2.54 per share, surpassing Wall Street expectations of $2.39 per share.

Why it matters: While increased cost-of-living pressures have been weighing on consumer spending in the US, a higher store footfall in China lent support to Lululemon’s traffic last quarter.

The company’s total comparable sales rose 6% year-over-year. While same-store sales were flat year-over-year in the US, they rose sharply by 26% in mainland China. Inventory contracted by 15% to $1.3 billion at the end of first quarter.

Lululemon’s board authorised an increase of $1 billion to the stock buyback program, which took the total remaining repurchase amount to $1.7 billion.

“In the first quarter, we saw strong momentum in our international markets, demonstrating how our brand continues to resonate around the world. Guests responded well to our product innovations across categories, and we are pleased by the progress we are making to optimize our U.S. product assortment,” CEO Calvin McDonald said.

Management guided to revenues of $2.4 billion to $2.42 billion and earnings of $2.92 to $2.97 per share for the second quarter, slightly below market estimates of $2.45 billion and $3.01 per share, respectively.

The company maintained its net revenue forecast of $10.7 billion to $10.8 billion for the full year but raised its earnings outlook to $14.27 to $14.47 per share, from its prior projection of $14.00 to $14.20 per share.

How shares responded: Lululemon’s shares gained 4.8% to close at $323.03 on Thursday, following the release of quarterly results. The stock has lost around 36% year to date.

What to watch: Investors will continue monitoring overall inflation levels in the US and the uptake in China, both of which could impact the company’s overall results ahead.

The markets today

The Canadian dollar will be in focus today ahead of jobs data from the country

Context: The CAD/USD forex pair moved higher on Thursday, as investors assessed the latest economic data.

Details: The Bank of Canada lowered its benchmark interest rate on Wednesday, becoming the first G7 central bank to loosen its monetary policy after the pandemic.

BoC policymakers cut the key interest rate to 4.75%, after holding it at 5% since July 2023. The rate cut is expected to give a boost to Canada’s economy.

Growth in Canada’s economy has been softening over the past few months. The region’s GDP expanded by 1.7% in the first quarter, coming in below market estimates of 2.2%. Its unemployment rate came in at 6.1% in April, which was the highest in over two years.

Data released on Thursday showed Canada’s Ivey Purchasing Managers Index declining to 52 in May, versus a two-year high of 63 in the previous month. The figure also missed market expectations of 65. Canada’s trade deficit shrank to C$1.05 billion in April, from C$2 billion in the previous month. This figure came in better than market estimates of a deficit of C$1.4 billion. Exports rose 2.6% to C$64.5 billion, while imports grew 1.1% to C$65.5 billion for April.

Weakness in the US dollar lent support to the CAD/USD pair. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell around 0.2% to 104.10 during Thursday’s session.

Strength in price of crude oil, one of Canada’s major exports, also provided a boost to the loonie. WTI crude oil for July delivery gained $1.48 to settle at $75.55 per barrel on Thursday.

The CAD/USD forex pair added around 0.2% to 1.3671 on Thursday. The S&P/TSX Composite Index gained 0.38% to close at 22,229.10.

What to watch: Investors await the release of jobs data from Canada today. The unemployment rate in the country is expected to increase to 6.2% in May, from 6.1% in April. Analysts expect employment in Canada to increase by 22,500 in May, significantly below April’s gain of 90,400.

Other Markets: European indices closed higher on Thursday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index up by 0.47%, 0.41%, 0.42% and 0.66%, respectively.

The news shaping the markets

Russia’s President Vladimir Putin warned that Moscow could target Western nations supplying weapons to Ukraine. The news sent the RUB/USD pair slightly higher in forex trading this morning.


The Philippines said its manufacturing production climbed 5.9% year-over-year in April, compared to a 6.8% decline in the prior month, lending support to the PHP/USD forex pair.


Japan’s foreign reserve assets dipped to $1.232 trillion in May, from $1.279 trillion in the previous month. The nation’s reserve assets falling to their lowest level since February last year sent the JPY/USD pair lower in forex trading this morning.


Brazil’s trade surplus shrank by 22.3% year-over-year to $8.53 billion in May, exerting pressure on the BRL/USD forex pair.


US trade deficit widened to $74.6 billion in April, from $68.6 billion in March. This being the largest trade gap since October 2022 sent the Nasdaq 100 lower by around 0.1% on Thursday.

What else to watch today

Germany’s balance of trade and industrial production, South Africa’s foreign exchange reserves, UK’s Halifax house price index, France’s Balance of trade, current account and foreign exchange reserves, Eurozone’s GDP and number of employed persons, Singapore’s foreign exchange reserves, Russia’s foreign exchange reserves and Bank of Russia’s interest rate decision, India’s foreign exchange reserves, Mexico’s inflation rate, Canada’s capacity utilization, average hourly wages full time employment and part time employment, US nonfarm payrolls, unemployment rate, average hourly earnings, wholesale inventories, Baker Hughes crude oil rigs, Baker Hughes total rigs, Manheim used vehicle value index and consumer credit, Turkey’s treasury cash balance, Japan’s foreign exchange reserves, China’s foreign exchange reserves, as well as Brazil’s car production and new vehicle sales.


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