Lululemon reports £67.14 million of net income in the fiscal second quarter

Lululemon Athletica Inc. (NASDAQ: LULU) published a stronger than expected earnings report for its fiscal second quarter on Tuesday. The company, however, refrained from giving future financial guidance due to the Coronavirus uncertainty. But its CEO Calvin McDonald expressed confidence that the company will show resilience in the second half.

“We are cautiously optimistic with regard to the second half of the year as we continue to navigate the uncertain environment.”

Lululemon’s Q2 financial results versus analyst’s estimates

The athletic apparel retailer said that its net income in the fiscal second quarter came in at £67.14 million that translates to 51.05 pence a share. In the same quarter last year, Lululemon had recorded a much higher £96.69 million of net income or 74.26 pence a share. In the first quarter, Lululemon had reported a 17% decline in its sales, as per the report published in June.

On an adjusted basis, the company earned 57.24 pence a share in the recent quarter. In terms of revenue, Lululemon registered £698.42 million in Q2 versus £683.34 million in the comparable quarter of last year. Earlier this year in June, Lululemon spent £387 million to acquire in-home fitness company, MIRROR.

Experts, on the other hand, had forecast the company to print a lower £653.5 million in the second quarter on 43.32 pence of earnings per share, as per FactSet. For the fiscal third quarter, analysts are anticipating the company to post 72.71 pence of earnings per share on £756.20 million of revenue.

Lululemon’s operating margin drops to 13.8% in Q2

Lululemon also highlighted 80 basis points of year over year decline in its gross margin on Tuesday to 54.2%. Its operating margin in the second quarter, it said, was 13.8% that marks a massive 520 basis points of decline on an annualised basis.

Shares of the company tanked 6.5% in extended trading on Tuesday. Including the price action, Lululemon Athletica is now trading at £253.72 per share. In comparison, it had touched a year to date low of £107.52 per share in March when COVID-19 pushed it into temporarily closing its stores. Learn more about how to pick winning stocks.

Lululemon had started the year at £180.56 per share in the stock market. At the time of writing, the Vancouver-headquartered athletic apparel retailer has a market cap of £35.23 billion and a price to earnings ratio of 79.24.