Lululemon (LULU) Tops Estimates, but Drops on CEO Departure

Lululemon Athletica inc. (NASDAQ:LULU): The athletics and yoga apparel maker topped Wall Street consensus EPS and revenue estimates in its earnings report, but sold off sharply after CEO Christine Day announced she will be stepping down. LULU dropped more than 15% after-hours.

EPS Results

Actual $0.32 vs. Expected $0.30

Grew 9% year-over-year

Revenue Results

Actual $345.80M vs. Expected $341.11M

Grew 21% year-over-year

Comparable stores sales increased by 7%

Guidance

EPS Q2 2013: Actual $0.33-0.35 vs. Expected $0.34

Revenue Q2 2013: Actual $340-345M vs. Expected $329.13

EPS Full Year 2014: Raised to $1.96-2.01

Key Takeaways from Conference Call

From departing CEO Chrstine Day: “Being a part of lululemon for the past five and a half years has been an incredible journey. I am proud of building a world class team that has produced one of the best growth, brand and profit stories in retail. Plans have been laid for the next five years and a vision set for the next ten. Now is the right time to bring in a CEO who will drive the next phase of lululemon’s development and growth. I will continue to actively lead the organization while the Board searches for a new CEO, and will work to ensure a smooth transition.”

Taking a Look at the Chart

Pattern: Long-term uptrend in Jeopardy

During Day’s tenure as LULU CEO, the stock has gone from little-known niche retailer, to fast-growing athletic apparel powerhouse. The stock hit a low of $2.16 in early 2009, and hit an all-time high of $82.50 yesterday leading up to the earnings report. In the short-term, the stock is “broken” with a large gap to the downside. The long-term uptrend line comes into play at around the $65 level.

(click to enlarge)

Potential Sympathy Trades – Stocks in the Same Sector

Express, Inc. (NYSE:EXPR)

The Gap Inc. (NYSE:GPS)

Aeropostale, Inc. (NYSE:ARO)

NIKE, Inc. (NYSE:NKE)

Under Armour Inc (NYSE:UA)

Disclosure: No relevant position

• Become A Funded Futures Trader