Yoga pants and athleisure apparel is recession resistant — but only for Lululemon

You wouldn’t be able to tell the economy is on the brink of entering a recession from Lululemon’s (NASDAQ:LULU) recent earnings report — which sent $LULU up 6.7% on Friday.

• $1.87B in sales — up 28.8.% compared to last year and exceeded analyst estimates.
• 23% increase in same-store sales — above the 17.9% estimate.

What’s the big deal? Lululemon has stood out among a struggling retail sector — whose problems are much too familiar to investors.

Major takeaways from Lululemon’s earnings:

1/ Premium goods have remained strong during the slowdown. Major retailers are reporting consumers pulling back — but not Lululemon. Nordstrom and Macy’s are also seeing growth among their premium brands.

2/ Inventory issues aren’t as problematic at LULU. While inventory jumped 15%, Lululemon told investors the current levels leave it “well positioned to support its revenue growth in the third quarter.”

3/ Lulu’s ambitious 5-year growth plan remains on track. Earlier this year, Lululemon announced plans to double sales by 2026 — a goal that looks more attainable after its recent quarter, per Lululemon’s CFO.

4/ Yoga pants are necessities: $LULU is down 20% this year — just behind the S&P 500, down 17%. But $LULU is far outperforming competitors Nike (NYSE:NKE) and Under Armour (NYSE:UAA) — down 36% and 61%, respectively.

Lululemon gave a strong full-year forecast of $9.75-9.90 earnings per share — above analyst estimates of $9.44. Athleisure is one of the few remaining COVID beneficiaries running strong.