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Athleisure heavyweight Lululemon Athletica released Q1 today with mixed results. The Canadian Based athletic apparel company reported EPS at $0.30, missing analyst’s estimates by just one cent per share due to rising costs. The company did beat on revenue with $495.5M in sales during the first quarter, delivering impressive top line growth that amounted to a 17% increase Y/Y.
Despite just barely missing on earnings per share, LULU stock is up nearly 5% as the company raised guidance for the remainder of the year. There were a lot of mixed emotions regarding the company leading up to the Q1 earnings release, Lululemon founder and former CEO Chip Wilson released an open letter to shareholders stating that “Lululemon has lost its way (the company) cannot cede the market opportunity we created to Under Armour and Nike”.
The negative sentiment about the company coming from founder Wilson has LULU distancing themselves from their founder, denying him permission to speak at annual shareholder meeting. The company also issued an email statement specifying that Wilson has had no involvement since stepping down from the board of directors in 2015. Wilson does raise an important point however about the increased competition from Nike and Under Armour, as both companies have identified that their Women’s segment offers some of the greatest potential for growth.
Under Armour has recently announced that the company is looking to add a fashion collection called UAS to help diversify its offerings and create a more complete brand that will get into higher end stores. Nike has announced it is created stores solely for Women, and has recognized that Women’s sportswear will play a key role in the company hitting its projected $50B in revenue by 2020 target. The sportswear market is currently valued at approximately $13B.