Lululemon Q2 beats estimates, CEO ‘cautiously optimistic’ for the second half of 2020

Lululemon released its second quarter earnings report after hours on Tuesday, beating investors’ estimates on both revenue and earnings per share. The company announced that it would not be providing any detailed guidance for its 2020 fiscal year, with the CEO telling investors he was ‘cautiously optimistic’ for the second half the year. Yahoo Finance’s Myles Udland breaks down the fitness brand's earnings report on The Final Round.

Video Transcript

SEANA SMITH: All right, we want to get to some breaking news here after hours. Lululemon, it's been a winner here over the last several months, out with its latest earnings report. Myles, what are the numbers?

MYLES UDLAND: Yeah, a huge quarter here for lululemon. Again, as you mentioned, investors had sort of anticipated this with the run-up in the stock we've seen in the last couple of months, though it's off sharply the last few days. Let's get to the numbers here, though. Adjusted earnings per share, $0.74-- better than the $0.56 per share expected by analysts. Revenues coming in better than forecast-- $902.9 million for the quarter against estimates for $844.1 million.

The company on the D-to-C line really crushing expectations here, $554.3 million in D-to-C revenue during the most recent quarter. Analysts were forecasting something closer to $461 million. So the mix, as it were, 61.4% of lulu's revenues coming through that D-to-C channel. That is-- on a percentage basis, that's triple what it was basically last year. They had about 24% of their revenues coming on D-to-C back in the second quarter of 2019. So from 24% of revenues D-to-C to north of 60%, certainly something that you would have anticipated in the pandemic but the company executing there.

They did not offer detailed guidance or detailed comp sales as far as we can see in the release. The company did offer some commentary in its release saying that they are cautiously optimistic with regard to the second half of the year as we continue to navigate the uncertain environment. Lulu management also adding that working and sweating from home have created an increased focus on health and wellness. And they believe 2020 is likely an inflection point for retail and for the company.

SEANA SMITH: Yeah, certainly interesting in all topics, I guess, that we have spoken about here on Yahoo Finance over the last several months. But again, lululemon, shares are under a bit of pressure today, which is just interesting on the heels of those results in after hours, with stock off just around 1%. But again, it's been a huge winner since the beginning of the pandemic but also going back to the beginning of the year with shares up just around 50% since January 1.