Risk/Reward Rating: Negative
Lululemon Athletica (Nasdaq: LULU) continues to execute ahead of its original growth plans. The company reported excellent Q2 2021 results after the market closed September 8, 2021 and provided strong guidance for the remainder of the year. On the conference call to discuss the results, management highlighted that the 25% annualized revenue growth rate the past two years has been well above the 19% growth rate experienced in the three preceding years prior to the COVID era. For the full year of 2021, the company guided for this to continue with sales expected to grow 25% annualized compared to 2019 and 42% compared to the COVID reduced sales of 2020.
The news sent the shares soaring over 10% the following day. While growth has been impressive in recent years, there are some clouds on the horizon which warrant caution regarding the sustainability of the recent above-trend growth.
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