Lululemon’s sales decline 17% as Coronavirus shuts stores in the first quarter

Lululemon Athletica (NASDAQ: LULU) released its quarterly financial results on Thursday that posted a 17% decline in its sales in the fiscal first quarter. The company attributed the loss to the Coronavirus pandemic that temporarily closed its stores in recent months.

Shares of the company were reported roughly 5% down in after-hours trading on Thursday. At £232 per share, Lululemon is a little under 30% down year to date in the stock market after recovering from a low of £110 per share in March. Learn more about value investing strategy.

Lululemon’s Q1 financial results versus analysts’ estimates

According to Refinitiv, analysts were anticipating the company to print £545.22 million in revenue in the first quarter. Their estimate for earnings per share (EPS) was capped at 18.22 pence per share. In its report on Thursday, Lululemon fell short of the estimate for revenue printing a lower £516.35 million in the quarter that ended on 3^rd May. Its quarterly EPS also came in marginally lower than the estimate at 17.42 pence per share.

The company also said in its report on Thursday that roughly 50% of its North American stores have been reopened to the public as of 10^th June. By the end of the month, it expects almost all of its retail stores to resume operations.

At £22.65 million, the athletic apparel retailer’s net income in Q1 came in significantly lower than £76.51 million in the same quarter last year. On a year over year basis, its revenue declined 17% in the recently ended quarter.

Owing to the COVID-19 driven store closures, the company did not report its quarterly comparable-store sales on Thursday.

Lululemon reports a 125% increase in online sales

In terms of digital sales, the company recorded £278.79 million that represented 54% of its total quarterly revenue. In the comparable quarter of last year, its digital sales made up 26.8% of its total revenue at £166.16 million. Lululemon also said that its online sales climbed by 125% in April alone. The trend, it added, has sustained in the second quarter to date.

Lululemon boasted to have concluded the quarter with £652 million in cash and equivalents. The company also has access to an additional £315 million via its revolving credit line. The gross margin in Q1 dropped to 51.3% of its net revenue versus the year-ago figure of 53.9%.

The retailer is currently valued at £31.77 billion and has a price to earnings ratio of 62.50.