Lululemon Athletica: Earnings Preview

Lululemon Athletica Inc. (LULU) is poised for continued success and store sales appear to be strong, says a report from RBC Capital Markets analyst Tal Woolley.

The analyst, who rates the shares “outperform” with a target price of C$47, said management appears to be on track to open 35 stores in 2008. The athletic retailer could also benefit from having a low store count in top U.S. markets, being available to take advantage of good real estate opportunities such as attractive lease deals and locations.

In a note to clients Mr. Woolley wrote:

We continue to believe that in tougher economic climates the apparel shopper will continue to respond to unique and differentiated product offerings.

He is anticipating per share earnings of C$0.11 compared with C$0.06 last year and consensus estimates of C$0.12, but noted momentum in the business appears to be strong and that he would not be surprised by a C$0.01 or C$0.02 upside to his prediction.

He said:

Lululemon remains a unique and compelling story in our opinion, and buying shares now gives investors the opportunity to get in on the ground floor of an early stage growth story.

Lululemon is expected to report first quarter results on Monday, June 2 after the market close.