{"id":28574,"date":"2023-06-28T07:15:33","date_gmt":"2023-06-28T11:15:33","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/lululemon-stock-3-numbers-that-help-explain-its-strong-performance\/"},"modified":"2023-06-28T07:15:35","modified_gmt":"2023-06-28T11:15:35","slug":"lululemon-stock-3-numbers-that-help-explain-its-strong-performance","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=28574","title":{"rendered":"Lululemon Stock: 3 Numbers That Help Explain Its Strong Performance\u00a0\u00a0\u00a0"},"content":{"rendered":"

\n Lululemon
\n shares have soared about 17% so far this year and have more than tripled over the past five years. In its most recent quarter, it beat earnings and sales expectations and lifted guidance for fiscal 2023.\u00a0<\/p>\n

In a retail environment weighed down by shrinking discretionary spending, investors may wonder how Lululemon (ticker: LULU) is managing to deliver such a performance. Rather than focusing overly on multiples or earnings per share, here we\u2019ll mostly explore a different set of numbers to illuminate other layers of the business.<\/p>\n

\n

Let\u2019s begin with Lululemon\u2019s belt bag\u2014a jazzed-up Gen-Z fanny pack. The product first hit shelves in 2018, and by the summer of 2022, it exploded in popularity, largely thanks to TikTok.<\/p>\n

An Enticing Price <\/h2>\n

The belt bag has especially resonated with younger consumers, who find the $38 price more budget-friendly than some of the triple-digit products on Lululemon offers.\u00a0<\/p>\n

If the belt bag was merely a stand-alone TikTok trend that brought young consumers into stores for a moment, it might boost financial performance for a quarter or two but would hardly be worth mentioning at this point. However, that doesn\u2019t appear to be the case. <\/p>\n

The company sees the belt bag \u201cas a strong acquirer of new guests, who importantly have not\u00a0<\/strong>shown any behavior differences versus existing guests,\u201d wrote J.P. Morgan analysts led by Matthew Boss in a report earlier this month.<\/p>\n

Lululemon management also sees opportunities to expand within the accessories category, touting strong growth and market share potential in socks, duffels and backpacks, with new product launches planned for the fall, Boss continued. <\/p>\n

How Young Shoppers Get Their Information<\/h2>\n

LTK\u2019s study on Gen Z shoppers, published in April, said 75% of that generation make online purchases based on creator recommendations. Creators are individuals who post content on social media that focuses on a particular product. <\/p>\n

It is worth noting that student loan payments resuming may mean some of those younger consumers will trim back shopping trips, dedicating more dollars to hefty monthly payments. <\/p>\n

By traditional metrics, the retailer isn\u2019t cheap. Lululemon is currently trading at\u00a0a price-to-earnings ratio\u00a0of 50.\u00a0In 2022, adjusted earnings landed at $10.07 a share. This year, analysts have penciled in $11.92 a share. Of the analysts surveyed by FactSet, 73% rate Lululemon shares as Buy, 15% as Neutral, and 12% as Sell.<\/p>\n

A creator-driven consumer market bodes well for Lululemon whose shoes, for example, have made appearances on social media, securing10.9 million hashtags on TikTok. The retailer stepped into the footwear game last year, launching shoes specifically designed for women. <\/p>\n

Some TikToks highlight the aesthetic of the shoe, while others offer users a full review, like one posted last year by AthletiKaty\u2014a runner who captured her first time wearing Lululemon shoes, reviewing them in real time. The video snapped up nearly 18,000 likes, and in the comments, users posed questions about different shoe brands.<\/p>\n

These videos also illustrate a point made by Jefferies analyst Randal Konik earlier this year. He commended the company for \u201corganically building a brand\u201d without devoting sizable amounts of money to marketing, adding that \u201ctheir stores are marketing vehicles in themselves.\u201d<\/p>\n

And indeed, the locations are bright and fitness-center-esque, neatly arranged with leggings, zip-up sweatshirts, shorts, tanks and a rotation of seasonal items each stamped with the tiny logo.<\/p>\n

Strong Foot-Traffic Numbers<\/h2>\n

According to data from Placer.ai, visits to Lululemon stores have consistently outpaced visits to apparel retail and luxury retail locations. In April, foot traffic to Lululemon rose 4% from a year earlier, compared to 10.6% and 13.8% declines for retail and luxury, respectively. In May, visits to Lululemon slipped 1.1%, but still scored much better than its aforementioned competitors, who saw 11.3% and 8.6% slides over the same period. <\/p>\n

The inflationary environment plays out differently at Lululemon than many other retailers. The company may have implemented \u201ca few targeted price increases here and there,\u201d Wedbush analyst Tom Nikic told Barron\u2019s<\/em> earlier this year, but its approach is \u201csurgical,\u201d versus lifting prices on every item.\u00a0<\/p>\n

The company has always capitalized on innovation, he explained, adding that rather than implementing a higher price for the same item, product refreshes give customers \u201csomething new here that actually commands and deserves a higher price point.\u201d<\/p>\n

Chief Executive Officer Calvin McDonald echoed this sentiment on the company\u2019s most recent earnings call. \u201cIn the franchise lineup, we\u2019re always looking at strengths, ways in which the positioning of that either through fit, versatility, functionality and\/or fabric can be extended into additional unmet needs for the guest,\u201d he said.<\/p>\n

So far, that mentality seems to be working. <\/p>\n

Write to Emily Dattilo at emily.dattilo@dowjones.com<\/p>\n<\/p><\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Lululemon shares have soared about 17% so far this year and have more than tripled over the past five years. In its most recent quarter, it beat earnings and sales expectations and lifted guidance for fiscal 2023.\u00a0 In a retail environment weighed down by shrinking discretionary spending, investors may wonder how Lululemon (ticker: LULU) is […]<\/p>\n","protected":false},"author":1,"featured_media":28575,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-28574","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nLululemon Stock: 3 Numbers That Help Explain Its Strong Performance\u00a0\u00a0\u00a0 | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Lululemon shares have soared about 17% so far this year and have more than tripled over the past five years. 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