3. Lululemon Athletica Inc. (NASDAQ:LULU)
5-Year Net Income Growth: 25.02%
5-Year Revenue Growth: 22.78%
TTM Net Income: $1.63 billion
Number of Hedge Funds as of Q2 2024: 45
Lululemon Athletica (NASDAQ:LULU) designs, distributes, and sells athletic apparel, accessories, and footwear. Its apparel segment focuses on a healthy lifestyle and athletic activities, and also offers fitness-inspired accessories. The company’s operations are divided into company-operated stores and direct-to-consumer segments. Its athletic apparel, accessories, and footwear are sold through various channels, including direct-to-consumer via e-commerce, company-operated stores, outlets, sales to wholesale accounts, e-commence, license and supply arrangements, and sales from temporary locations.
Lululemon Athletica (NASDAQ:LULU) manages stores in the United States, Canada, Australia, the United Kingdom, Germany, South Korea, and others. It also operates Lululemon Studio, which offers in-home connected fitness and related content subscriptions. The company is running on strong fundamentals. By merchandise category, it experienced a 6% growth in women’s, 11% in men’s, and 7% in accessories in FQ2 2025. Its EPS also increased by 18%, primarily driven by a strong gross margin.
It is demonstrating continued confidence in the business due to its growing popularity. It repurchased $584 million of stock in FQ2 2025, bringing it to $1.2 billion year-to-date. Its regional performance is also improving, with continued strength in international markets as the brand continues to resonate with people across the globe.
Expanding its business outside of North America is one of the largest opportunities for the company, and it is on track to quadruple its international revenue from 2021 levels by the end of 2026. This strong momentum can also be seen reflected in a 29% growth (31% in constant currency) in international revenue. Mainland China experienced 34% or 37% in constant currency growth, with the rest of the world growing by 24% of 27% in constant currency.
Lululemon Athletica (NASDAQ:LULU) is attracting new guests to the brand through its several e-commerce platforms and stores in mainland China, leading to robust second-quarter growth. It has a solid operating model and innovative product offering, leading to a positive outlook for the company. It takes the third spot on our list of the 8 high growth retail stocks that are profitable in 2024.
Middle Coast Investing stated the following regarding Lululemon Athletica Inc. (NASDAQ:LULU) in its Q2 2024 investor letter:
“I mentioned last quarter and higher above that I like buying quality stocks on sale. Lululemon Athletica Inc. (NASDAQ:LULU), the 2nd worst performer in the S&P 500 this year, qualifies. I published a full thesis on the stock before its most recent earnings, but the basics: the yoga pants and clothing company has had an amazing post-pandemic run that is approaching its end. Its growth in the US is slow/non-existent at the moment, but it is growing very fast in China and Europe. I think that international growth is likely to endure, and that its US slowness is likely to be temporary. Lululemon shares are not ‘cheap,’ but they are on sale for an average price, and I think the company will grow faster than average over the next five years. I would be wrong if Lululemon is a fad gone bust, or faces a huge post-pandemic hangover as people get used to leaving the house more. We’ll see.”
