Yogawear maker Lululemon Athletica (LULU) late Tuesday reported a surprise second-quarter sales increase and earnings that beat expectations, and the company said it was "cautiously optimistic" about the back half of the year as the coronavirus pandemic forces more people to work out at home.
Still, Lululemon stock fell after-hours. The stock, along with the broader S&P 500, reached a record high last week.
CEO Calvin McDonald, in the company's earnings release, predicted that 2020 represented a turning point for Lululemon and other retailers, as more formal work attire hangs in closets and more customers seek to buy and do things online.
"As trends around the world are shifting to working and sweating from home with an increased focus on health and wellness, we believe 2020 is likely an inflection point for retail and for Lululemon," he said.
Lululemon Earnings
Lululemon earned 74 cents a share, well above Zacks estimates for 56 cents per shares. Revenue rose 2% to $903 million, above estimates for $833.81 million.
The company did not provide same-store sales figures, saying such statistics are "not currently representative of the underlying trends of its business" following the temporary closure of its stores due to the pandemic.
Lululemon said 492 of its 506 company-run stores were open as of Aug. 2. But net sales at those stores fell 51% during the quarter.
The company said "direct to consumer" net sales jumped 155% and made up 61% of total net sales.
Lululemon Stock
Lululemon stock fell 1.4% after hours in the stock market today. After angling higher starting in July, the stock fell from record highs reached last week. Shares were still above their 50-day line.
The IBD Leaderboard stock still has a strong 94 Composite Rating. Its EPS Rating is 85.
Lululemon reported results as the coronavirus pandemic keeps many fitness centers shuttered, leaving more people to shape their workout routines around videos offered online. More companies have tried to capitalize on the trend.
Nike (NKE), which also offers online workouts, was unchanged after hours on Tuesday. Peloton (PTON), best known for its connected workout bikes, slipped 0.2% late.
Peloton jumped earlier in the day. The company said would launch a new bike and a new treadmill.
Apple (AAPL), reportedly also looking to stream online workouts, crept 0.7% higher after hours.
Lululemon in June agreed to acquire Mirror, an at-home fitness company, for $500 million. The acquisition adds to Lululemon's digital workout offerings. The news sent Lululemon stock higher.
'New Normal' For Lululemon Stock
During Lululemon's first quarter, comparable e-commerce sales jumped 70%. During that quarter, management, citing data from NPD, said Lululemon notched "one of our largest quarterly gains in market share in recent years" within athletic apparel.
"A new normal emerged and we were encouraged to see how quickly our guests were embracing both working and sweating from home," McDonald said of trends earlier in the year.
RBC analyst Kate Fitzsimons, in a research note on Friday, said she expected a "strong response" to Lululemon's July online warehouse sale. She expected digital demand for Lululemon to stay solid.
Even as Lululemon stock eases from record highs, John Zolidis, president of Quo Vadis Capital, said in a research note before the earnings that he believed Wall Street "does not appreciate the material structural benefit from revenues shifting to the digital channel."
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