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The Yahoo Finance Live team discusses a jump in Lululemon's stock following positive Q4 earnings.
Video transcript
SEANA SMITH: We want to get to some breaking news, Lululemon releasing its fourth quarter results. Josh Schafer, what do you have?
JOSH SCHAFER: Yes, so Lululemon, we've got a beat on the top and bottom line here for the last quarter. The fourth quarter revenue coming in at 2.77 billion. That is against estimates of 2.7 billion, and adjusted EPS coming at $44.40-- excuse me-- and that's against estimates of $4.26. Now you see that Q1 EPS, the guidance there also came in above Wall Street estimates.
And then two key numbers here also forward-looking, guys. Full year net revenue coming in at 9.3 to 9.4 billion. That's above the estimate, the Street estimate for 9.1 billion. And then full year EPS coming in at a guided range of $11.50 to $11.72. That comes in, again, above the Street estimate of $11.27 for full year EPS.
But one key number we were talking about going into this report is that gross margin number. And that number did miss Street estimates for the fourth quarter. So the fourth quarter gross margin number coming in at 55.1%. The Street had been looking for 57.1%. So 55 versus 57 there. That's something that I'm sure will come up on the call and I'm interested to hear more about.
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SEANA SMITH: Yes, certainly. And when you take a look at that inventory number coming in below the Street's expectations, obviously, you would think that's a good sign here for Lululemon as the company tries to get more of a control over their excess inventory. It looks at least for now that the Street is looking past that gross margin miss. And a lot of the focus in this report is on these results, but also maybe more so on that guidance number, when you take into account that revenue, the outlook here, full year net revenue outlook, 9.3 billion, 9.41 billion, beating the Street's estimates by wide margins. The Street was looking for 9.1 billion.
And I think this really shows a couple of things. One, that the consumer is still spending, that Lululemon is able, at least up until this point, to maybe navigate what is a very challenging time for this company, and inventory was a big concern, like you said, going into this. Lots of questions about whether or not they were going to be able to get a handle on that, given their sales structure and how they approach sales. It looks like, though, at least they made maybe enough improvement on that to satisfaction.
JOSH SCHAFER: Well, Lulu's been the kind of company that grows on a continuously growing net sales number, right? So to see that number continually going up, I think is what people are excited about here, to some extent. When you think about Lulu, they're not as promotional as some other retail companies. So people are wondering, can they continue to sell and offload that inventory without promoting too much? You're seeing a little bit of that margin pressure, but I think the big thing here, Dave, is to just continue to see that revenue number potentially growing into next year, basically saying if demand-- if maybe demand is hurting in some places, but maybe not for the high end consumer that Lululemon sees.