Lululemon's Q4 Will Reflect Challenging Holiday Season and Currency Fluctuations - RBC

A challenging Christmas season and currency fluctuations will take a bite out of Lululemon Athletica Inc. (LULU) in the fourth quarter.

That’s according to analyst Tal Woolley at RBC Capital markets, who maintained his outperform rating and C$9 price target on the retailer’s shares.

“We do not believe the themes in Lululemon’s fourth quarter results will deviate far from other apparel players,” he wrote in a note to clients

He is forecasting per share earnings of C$.15 compared with C$.21 in last year’s fourth quarter and predicts a same-store sales drop of 10% to 12% — “probably more than -20% on a reported basis due to the 19.2% decline in the Canadian dollar,” Mr. Woolley added.

He noted a weakened U.S. economy could help the retailer secure better deals on leases for new sites as it continues to expand, albeit at a slower rate.