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- Recent controversies at Lululemon have dogged the company, resulting in damaged brand equity.
- Nike went through a similar process in the 1990s, which resulted in a stronger company.
- Recent lows indicate a potential buy for a growth stock type trajectory.
- After one of the hottest growth surges in retail from 2009-2012, Lululemon fell 20% in 2013 and has fallen over 30% YTD.
- A lack of patented technology in its yoga-wear is allowing Lululemon's competitors to sell identical yoga-wear at cheaper prices.
- We believe a fair price target for LULU to be $29 per share by the end of FY 16.
- The company has a strong business model which gives it an advantage over its competitors.
- The risk of third-party suppliers exists in the industry and it has the potential to have an impact on the brand value of the company.
- Lululemon is still generating impressive margins and the expansion in European and Asian markets should further enhance its margins.
- The market is highly competitive and the company faces competition from Nike and Under Armor.
- The company reported strong results in Q2 2014, but they were still a drop from the same quarter last year.
- Competition for LULU is tough: Gap and VF Corp have expansion plans.
- The company has overseas expansion plans which should be completed by 2017.
- The consensus on LULU’s stock was ‘hold’ with a price target of $46.79. Eighteen analysts rated the stock as a hold, while only seven rated it as a 'buy'.
Why Shares Of Lululemon Athletica Have Tremendous Upside
- While shares of Lululemon Athletica are down, we believe the company’s best days still lie ahead.
- Lululemon shares are very attractively valued when compared to peers in this space.
- The company has tremendous long term growth prospects, both within North America and internationally, especially as healthful living comes center stage.
- New management has taken steps to ensure Lululemon’s future remains bright.
Lululemon Athletica: Do Q2 Earnings Point To An Attractive Investment Opportunity?
- The company’s online sales were better than the sales of the traditional brick and mortar stores.
- The efforts by the company to boost its business cost it heavily and hurt its profit margin.
- The average price of athletic goods is expected to decline as an outcome of rising competition and this would further stress the company’s margins.
- Lululemon’s share price surged as much as 18% last week as the company reported better than expected second quarter fiscal year 2014 results.
- The company’s revenue climbed 13% topping the company’s projection and leading to earnings beating the Street’s estimates.
- I believe that the company’s margin pressure will begin to ease because of the cleaner inventory heading into the second half of fiscal year 2014.
- Lululemon is planning to open a standalone men’s store to drive growth from this segment and is also planning to have 20 stores in Europe and Asia by 2017.
Geographic Expansion Will Bring Growth For Lululemon
- Lululemon posted better-than-expected results and raised its full year earnings guidance by a $0.01.
- The company’s margins deteriorated during this quarter but are still better than the industry averages. The margins are expected to improve in the next couple of years.
- The expansion in high-growth international markets is anticipated to bring strong revenue growth for the company.
- Despite the surge in LULU's stock price, I am still bullish on the company's growth potential.
- A discussion about Ivivva Athletica explaining how LULU is developing the next generation of its adults' brand.
- Lululemon targets men's market share.
- LULU has handily beaten the market over the last five years.
- However, post the widely publicized fiasco behind its "see-through" yoga pants, the stock has fallen 35% over the past year.
- An investment in LULU assumes that the stock will return to historical levels of growth and profitability.
- Conservative investors should stay away - the stock is still fraught with risk.
Lululemon: My Assumptions In Levered Returns' Valuation Model Suggest Cramer Is Right
- The Q2 earnings beat was the result of conservative guidance from management.
- Cramer suggests 5% comparable store sales decline is the real story. I propose an alternative.
- EBITDA margins will likely not return to the high-20% range due to pricing pressure from new competition.
- My assumptions in the Levered Returns 5-year valuation model yields a fair value per share of $36, which is 21% below its September 12th closing price of $45.19.
- The company beat on the top and bottom lines, sending shares up over 12%.
- We still have a cautious outlook on the company given the rising competition.
- We didn’t expect the strong earnings and stock reaction but give credit where it’s due.
Breaking It Down: Lululemon's Q2 2014 Earnings Call
- Lululemon missed earnings estimates but posted solid guidance.
- Management should have been more thorough in explaining the company's buyback policy.
- The company is well-capitalized and possesses a powerful brand image with a growing customer base.
- Lululemon is showing signs of improvement.
- Improving sales highlights unusual trend in assortment and product mix allocation opportunities.
- SSS continue to bear negative results.
- Lululemon posted Q2 EPS of $0.33 (a beat of $0.04) and a 13.4% increase in revenue compared to the same period last year.
- The company's Q2 results, confirms my opinion that the company's long term strategic decisions are starting to pay off.
- In my original article, I anticipated that earnings growth for the next several quarters would be slight as the company focused on key initiatives such as global expansion.
- LULU beat on all key metrics in Q2.
- Strong headline numbers but underlying trend continue to remain weak.
- Solid inventory management.
- For the quarter, Lululemon reported revenue and earnings that topped forecasts, sending shares soaring in early trading.
- This confirms my suspicion that Mr. Market might have been underestimating the business's potential but its results worry me a bit because of declining comparable store sales.
- In my last article on the retailer, I anticipated a decline in profits and higher sales, but did not see the business beating forecast on the top and bottom lines.
Lululemon Athletica - With Initiatives Already Starting To Pay Off, Investors Are Pleasantly SurprisedThe Value Investor • Thu, Sep. 11
- Lululemon reports a strong second quarter earnings report, hikes its full year outlook.
- Shares offer long term appeal in my eyes amidst the strong growth, track record and balance sheet.
- As shares have been cut in half from their highs last year, there is still long term potential.
Lululemon: Looking For A Reason To Get Excited Again
- We should hopefully get clarity and direction from management this quarter.
- Future EPS estimates don't merit a higher stock price given a P/E of 22.
- Short interest remains exceedingly high.
Tue, Nov. 25, 3:19 PM
- Lululemon (LULU +3.8%) will open a men's store in New York on Friday.
- The Athletica outlet in SoHo will be the company's first men's-only store.
- What to watch: The development could raise the stakes of the Nike (NYSE:NKE) vs. Lululemon battle after the Swoosh opened its first-ever women's store last week.
Thu, Nov. 20, 1:26 PM
- Nike (NKE +0.6%) opened its first store devoted to women in Newport Beach, California this week and has plans to open one in China next week.
- The company has said previously that it expects the women's business to grow to $7B in annual sales from $5B by 2017.
- There are no plans for a broad roll-out of women's stores in the U.S. just yet.
- Food for thought: Does Nike's test with women's stores take a buyout of Lulemon (LULU +2.3%) off the table.
Mon, Nov. 17, 11:44 AM
- Credit Suisse comes back after some deep data mining off of Lulemon's (LULU -1.1%) website to reason that the retailer's men's apparel is selling well.
- In-stock rates on men's items fell, while SKU counts trended higher.
- The channel check on women's color product inventory was less promising.
- CS keeps a Neutral stance on LULU on its view that some risk to revenue growth and comp gains exists.
Fri, Nov. 14, 9:05 AM| 4 Comments
Thu, Nov. 6, 1:27 PM
- Apparel seller Ann issued a warning today on the impact of labor uncertainty at West Coast ports as part of its Q4 guidance.
- The retailer expects $8M in extra air freight costs due to product shipment delays.
- There's also been some reports of delays at ports in the Seattle and Tacoma area which account for 16% of container cargo traffic on the West Coast.
- Analysts fret that more companies will resort to air freight to ensure stores are stocked in front of the Black Friday rush.
- Apparel and footwear stocks: SKX, FL, VRA, ICON, NKE, WWW, DECK, CROX, SHOO, BWS, KATE, ANN, PERY, LULU, RL, PVH, VNCE, CRI, UA, HBI, VFC, COLM, KORS, GIL, SQBG, JCP, KSS, DDS, M, JWN, RL.
Mon, Oct. 20, 5:38 PM
Wed, Oct. 8, 3:09 PM
- Lululemon (LULU +2.4%) plans to open its first men's outlet this fall with a concept store in New York City.
- The apparel seller sees opening more men's store before 2016.
- Though Lululemon generates more sales per square foot than any of its peers, the company will take a measured approach with the growth of its men's business.
Wed, Oct. 8, 6:51 AM
- Cowen Research weighs in on the global apparel industry.
- The investment firm thinks the market will grow in the low single digits over the next few years.
- Moderate materials costs inflation will partially offset higher labor and compliance, predicts Cowen.
- Related stocks: OTCPK:FRCOY, OTCPK:IDEXY, GPS, PVH, RL, NKE, OTCQX:ADDYY, OTCPK:HMRZF, LULU.
Tue, Oct. 7, 8:05 AM
- The National Retail Forecast forecasts holiday sales will increase by 4.1% this season.
- The mark doesn't includes sales from the auto, gas, and restaurant categories.
- Holiday sales haven't risen at a +4% clip since 2011.
- Online sales are pegged for a 8% to 11% rise this holiday season to top last year's 8.6% gain.
- Related stocks: AMZN, TGT, WMT, BBY, M, GPS, JWN, KSS, LULU, ANF, AEO, URBN, DKS, CAB, NKE, LB.
- Related ETFs: XLY, XRT, VCR, RTH, RETL, IYK, IYC, FXD, FDIS, SCC, UCC, PMR, UGE, RCD, SZK
Wed, Sep. 24, 8:13 AM
- Retail sales could increase by 4.5% to $986B this holiday season on an improved macroeconomic backdrop, forecasts Deloitte Touche.
- The mark would easily top last year's 2.8% rise.
- Online sales are tipped to rise by 14%.
- Promotional activity across broad retail has been dialed back a touch during the back-to-school season, but is still a risk to margins heading into the crucial shopping period.
- What to watch: This holiday season could be an operational pressure cooker for UPS (NYSE:UPS) and FedEx (NYSE:FDX) with demand expected to be high.
- Related stocks: AAP, AEO, ANF, BBBY, BBY, BJ, CHS, COH, COST, DG, FDO, FL, GPS, JCP, JNY, JWN, KSS, LB, LULU, M, NDN, PIR, RL, TGT, TIF, TJX, UA, URBN, VFC, WMT, ZLC, PERY, SQBG, VNCE, KORS, GIII, KATE, GIL, VRA, ICON, PSMT, AMZN.
- Related ETFs: XLY, XRT, VCR, RTH, RETL, IYK, FXD, FDIS, PMR, UGE, RCD, SZK
Fri, Sep. 19, 8:07 AM
- Lululemon (NASDAQ:LULU) would make an "ideal" acquisition for VFC Corp., reasons KeyBanc.
- The investment firm thinks VFC could swing paying a 30% premium for LULU in what would be a highly-accretive combination.
- Deal breakdown: VFC brings strengths in product quality and store operations, while Lululemon has the strong brand in the high-growth active lifestyle category.
- LULU +0.7% premarket, VFC +1.0% off of a KeyBanc upgrade.
Mon, Sep. 15, 12:20 PM
- Mall retailer stocks start off the week in sluggish fashion, trailing broad market averages.
- Channel checks on back-to-school traffic at malls have come in below expectations, although some analysts think e-commerce gains will offset.
- Sales for retail clothing stores rose 0.3% M/M and 3.2% Y/Y in August.
- Decliners: Lululemon (NASDAQ:LULU) -3.1%, Express (NYSE:EXPR) -2.2%, Pacific Sunwear (NASDAQ:PSUN) -2.2%, American Eagle Outfitters (NYSE:AEO) -1.6%, Wet Seal (NASDAQ:WTSL) -2.1%, Buckle (NYSE:BKE) -1.0%, Urban Outfitters (NASDAQ:URBN) -1.1%, Zumiez (NASDAQ:ZUMZ) -1.9%.
Fri, Sep. 12, 10:21 AM
- Lululemon's (LULU +3.3%) earnings beat this week had a lot to do with conservative guidance, says BMO Nesbitt Burn's John Morris.
- The analyst thinks visibility is still lacking on the apparel seller's sale and margin recovery.
- Citigroup warns on a mix shift at Lululemon to lower-margin items and pricing pressure from competitors.
- There's still plenty of positive to latch onto say other analysts leaning to the bullish side. The addition of new "smart money" board members at the company and the expansive growth of the athletic apparel category gives Lululemon long-term potential.
Thu, Sep. 11, 12:45 PM
Thu, Sep. 11, 9:14 AM
Thu, Sep. 11, 7:06 AM
- Lululemon (NASDAQ:LULU) says it expects full-year revenue to be $1.78B-$1.80B based on a low single-digit comp. The consensus estimate of analysts is $1.78B.
- The forecast for full-year EPS is $1.72-$1.77 vs. consensus $1.74.
- Guidance assumes a tax rate of 38.5%.
- Previous: FQ2 earnings, details
- LULU +12.2% premarket.
LULU vs. ETF Alternatives
Lululemon Athletica Inc is a designer and retailer of technical athletic apparel operating primarily in North America and Australia. Its yoga-inspired apparel is marketed under the lululemon athletica and ivivva athletica brand names.
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