Lululemon’s (Nasdaq: LULU) will report Q1 FY2024 earnings with investor sentiment at a clear inflection. Once a top-tier retail growth story, the stock has underperformed badly in 2024 — down more than 30% YTD — amid concerns over U.S. traffic softness, flattening comps, and rising SG&A pressure. Despite that setup, expectations for the quarter remain measured and beatable, with EPS estimated at $2.38 and revenue expected to rise ~9.6% YoY to $2.20B.
The core U.S. business is under the microscope. Last quarter, comps were flat despite new product introductions, community activations, and continued digital marketing investment. This quarter, management must address whether traffic and conversion have improved, or if discretionary pullbacks continue to pressure top-line momentum.
Offsetting this is strong international performance — particularly in China, where comps exceeded 30% last quarter and store expansion continues. Analysts expect another 30–40% revenue growth in China, which now accounts for nearly 12% of LULU’s total revenue base. If this trend holds, it could help buffer weak North American dynamics.
Margins are also in focus. LULU is guiding for ~100 bps YoY operating margin compression in FY24, citing FX headwinds, freight normalization, and elevated wage inflation. Investors will want reassurance that gross margin can remain north of 58% and that SG&A scaling is disciplined as LULU invests in tech, DTC infrastructure, and international markets.
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