Lululemon shares jumped after the narrow-moat retailer's third-quarter results demonstrated continued market share gains and pricing power. We plan to raise our $59 fair value estimate by a dollar or two after revising our revenue outlook higher for the fiscal year, but we still see shares as overvalued today.
Nothing in the quarter changed our belief that new store openings and comparable sales growth will moderate long term, as the athletic apparel market becomes more saturated and the athleisure trend fades. One striking feature of the quarter was that direct-to-consumer online sales grew more than 25%, but same-store sales were tepid, rising only 1%, excluding the impact of currency. This leads us to believe that further acceleration in online sales is coming at the expense of physical store sales rather than producing incremental revenue.
Overall, we're comfortable with our sales projections of low-double digit online growth and low-single single same-store sales growth over the next five years along with a rise in operating margins to over 20% from 18% last year.