Lululemon and Chewy take big steps Tuesday night

JTuesday was another good day for the stock market as investors saw many stocks continue to recover from substantial losses from earlier in the year. the Dow Jones Industrial Average (DJINDICES: ^DJI), Nasdaq Compound (NASDAQ INDEX: ^IXIC)and S&P500 (SNP INDEX: ^GSPC) are still well below their all-time highs, but gains of 1% to 2% helped put another hit in the declines they saw in the first quarter of 2022.

Index

Percent Daily Change

Daily point change

Dow

+0.97%

+338

S&P500

+1.23%

+56

Nasdaq

+1.84%

+265

Data source: Yahoo! Finance.

After hours, a few key stocks released their latest results. Lululemon Athletica (NASDAQ: LULU) had set the bar low, warning that its holiday season could be weaker than it had seen in previous years. Meanwhile, investors had high hopes for the pet food e-commerce retailer. Soft (NYSE:CHWY). Below, we’ll take a look at both earnings reports and see how their respective stocks fared.

Lululemon bounces

Shares of Lululemon Athletica rose nearly 8% in after-hours trading Tuesday night. The yoga-centric sportswear retailer’s financial numbers were reasonably strong, and investors appreciated the shareholder-friendly decision the company added to its quarterly report.

Image source: Getty Images.

Lululemon saw revenue increase 23% in the fourth quarter year-over-year. Same-store sales increased 32%, while direct-to-consumer sales remained strong with an increase of 17%. North American results were slightly weaker with an increase of 21%, but Lululemon offset this performance with much stronger gains of 35% internationally. Adjusted earnings were $3.37 per share, up 31% from year-ago levels.

Lululemon’s numbers were even better compared to pre-pandemic levels. Quarterly net revenue jumped 52% from two years ago, and annual revenue of $2.3 billion was 57% higher than the 2019 total, with adjusted annual profit of $7.79 per share which also increased by more than half over the two-year period.

Shareholders were also delighted to see Lululemon approve a new $1 billion share buyback program. With the company having spent more than $800 million on buyouts in the fourth quarter, Lululemon sees the recent downturn as a good opportunity to trim its stock count, and investors seem hopeful the company will be able to beat calls for 2022 revenues grow 20% to 22% and produce earnings of $9.15 to $9.35 per share.

chewy rolls

Chewy shareholders were less fortunate, as the stock fell nearly 14% after the close. The online pet food retailer’s fourth quarter financial results did not meet the reception expected by those watching the stock.

Chewy’s results were mixed. Sales increased 17% in the fourth quarter compared to the prior year period, closing a fiscal 2021 with gains of 24% compared to 2020. Active customers increased by nearly 8% from a year on the other to reach 20.7 million. However, gross margin declined, resulting in net losses of $63.6 million for the quarter and $73.8 million for the year.

The company blamed inflationary pressures for the disappointing losses. Chewy was unable to raise prices fast enough to catch up with cost inflation, and he also had to deal with increases in the freight charges he incurred to get the products to the company. to resell them to customers. Chewy’s new outbound shipping contract with fedex (NYSE: FDX) only had a modest effect on gross margin, but he expects the new deal to put further pressure on gross margin levels throughout 2022.

Long-term, Chewy is excited about its new initiatives, including the future implementation of a loyalty program, sponsored ads on its website, and the ongoing rollout of its Chewy Health veterinary care division. For now, however, investors are more worried about slowing growth, which has weighed on the stock price.

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Dan Caplinger owns Lululemon Athletica. The Motley Fool owns and recommends Chewy, Inc., FedEx and Lululemon Athletica. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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