5 Things Lululemon Management Wants You to Know

MarketsMotley Fool

When lululemon athletica (NASDAQ: LULU) announced fiscal fourth-quarter 2019 results on Wednesday after the market closed, investors couldn't have been more pleased.

The yoga apparel specialist's revenue had climbed 26% to $1.17 billion, including a stellar 16% increase in total comparable-store sales. And net income soared an even better 82% to $218.5 million, or $1.85 per share. Both figures easily crushed Wall Street's expectations for earnings of $1.74 per share on more modest 20% revenue growth.

Continue Reading Below

Perhaps unsurprisingly, Lululemon stock popped 14% on Thursday in response.

Still, I think it's an invaluable exercise for shareholders to dig deeper in an effort to understand what's driving Lululemon's business. Lucky for you, the company provided plenty of insight to that end during its subsequent quarterly conference call with analysts. Here are five things from this quarter's call that Lululemon management wants investors to know.

On reaching financial goals far ahead of schedule

To be clear, Lululemon shares had already climbed almost 90% in the year leading up to this report, helped by the fact it had easily exceeded management's expectations for each of the past three quarters. But it certainly helps that the company was able to meet the above goals -- namely improved operating and gross margins and strong e-commerce penetration -- so far ahead of its original plan.

What's more, Lululemon is quickly closing the gap on reaching arguably its most ambitious goal of $4 billion in sales by 2020 -- which would represent 21.6% growth from $3.3 billion in its just-completed fiscal 2018 -- an aggressive target that previously left many industry watchers wondering whether Lululemon had set its bar too high.

On ramping personalization initiatives

Given its roots in yoga apparel and its zeal for educating its community with in-store fitness classes, Lululemon is already an inherently personal business. And the company's enviable 16% total comparable sales growth -- comprised of a 6% increase in comparable-store sales and 37% growth in direct-to-consumer net revenue -- is evidence its efforts are succeeding. But Lululemon is astutely doubling down on personalization technology in an attempt to make its brand even stickier for its loyal customer base.

On growth from new and existing customers

Perhaps partly thanks to the above personalization initiatives starting to yield fruit, Lululemon is not only doing well attracting new customers, but those customers are also returning on a more frequent basis. If the company can sustain these trends in the coming quarters, let it suffice to say it should bode well for its top- and bottom-line results.

On ramping international growth

For perspective, of the $4 billion revenue goal for 2020, Lululemon only expects $1 billion to come from international store locations. It should be encouraging for current shareholders, then, to see the company accelerating its international expansion as a result of a strong reception to the brand in its most promising overseas markets. If Lululemon can indeed build its international segment to eventually represent half of total sales, we'll be talking about a significantly more valuable, diversified business down the road.

On that massive new share-repurchase plan

Given the company's share-price appreciation and the conclusion of its previous $600 million repurchase authorization, it should be little surprise that Lululemon's board approved a slightly smaller buyback plan in its place. Still, with its store expansion plans and other strategic growth initiatives well funded, it's hard to fault the company for putting its enormous cash hoard to use by reducing the size of its float.

10 stocks we like better than Lululemon AthleticaWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Lululemon Athletica wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of March 1, 2019

Steve Symington has no position in any of the stocks mentioned. The Motley Fool recommends Lululemon Athletica. The Motley Fool has a disclosure policy.