Lululemon Athletica: The Upward-Facing Stock

Lululemon athletica, the self-described “yoga-inspired, technical apparel company for women and men”, is in great shape. The Canadian brand continues to profit from the ongoing athleisure trend, having been one of the first to blur the lines between performance and everyday wear.

On Tuesday, Lululemon reported another strong quarter, beating expectations across the board. Net revenue for the quarter ended August 2, 2020 was $902.9 million vs. expectations of $803.8 million, while adjusted earnings per share amounted to $0.74 vs. analyst predictions of $0.56. The Vancouver-based company profited from a 155-percent jump in direct-to-consumer (i.e. online) sales as customers adapted their shopping habits during the pandemic. The rise in online sales was partially offset by declining sales in company-operated stores, many of which were temporarily closed during the quarter.

Despite strong competition from industry heavyweights such as Nike and Adidas, Lululemon has grown into a globally recognized brand in recent years, operating more than 500 stores in almost 20 countries. As the following chart shows, the company's share price has increased more than 6-fold since January 2015, bringing its market cap close to $50 billion. If Lululemon was a yoga pose, it would certainly be the upward-facing stock.