- Lululemon Athletica plunges below $400.
- Full-year guidance cut to $250 million below consensus.
- LULU stock halts fall near long-time support at $386.50.
- Q4 earnings and revenue arrive above consensus.
A Wall Street favorite, Lululemon Athletica (LULU) stock was dashed against the rocks on Friday due to management’s lower outlook for revenue in the current year. The athleisure stock fell more than 18% at one point to $387, dropping below $400 for the first time since last November.
Call it a case of expectations getting too far ahead of the curve. Lululemon beat consensus forecasts for the fourth quarter, but that just wasn’t enough to satisfy the bulls.
The market opened slightly lower on Friday as it digests the previous two days of gains following Federal Reserve Chair Jerome Powell’s press conference in which he remained committed to cutting interest rates this year despite recent hints of inflation in the US economy.
Lululemon Athletica stock news
The primary factor in Friday’s sell-off was that the athleisure brand’s management released their 2024 full-year sales outlook. It came in a range from $10.7 to $10.8 billion, which was well below the $11 billion consensus from Wall Street analysts.
For the current quarter, Q1, management said sales would reach $2.18 to $2.2 billion, which was likewise below the $2.26 billion consensus. Essentially, this means that revenue is staying largely flat from recent quarters in mid-2023, but the guidance would still outflank Q1 2023 (fiscal Q1 2024) by about 9%.
Lululemon opened 25 new stores during the fourth quarter, which ended in December, and ended the period with a total of 711 stores.
In the fourth quarter, Lululemon earned $5.29 in GAAP earnings per share, which beat consensus by more than 5%. Revenue of $3.21 billion rose 16% YoY, besting consensus by a slight $10 million.
The rise in sales during Q4 was largely attributed to a 54% increase in international revenue. Overall, same store sales rose 12% YoY in the fourth quarter.
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Lululemon stock forecast
LULU stock halted its sell-off at an intraday low on Friday of $387.11. That is a good sign for worried shareholders and also seems to have beckoned bulls to enter there as the price rebounded off that low. This is because the $386.50 support/resistance level has featured in the price action about a dozen times since December 2022.
It will be a bad sign if $386.50 fails to hold up, but so far that doesn’t seem to be the case. LULU stock needs to break above $410 to re-engage bulls. That level stems from a range high back in April 2022. Any break of $386.50 will send Lululemon stock down to $360, where bulls protected the downside twice in August and October 2023.
LULU daily stock chart