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Lululemon Athletica Inc LULU

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Stock XNAS Rating as of
$323.03 +14.76 (4.79%)
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As of Delayed Price Post-Trading: $321.25 −1.75
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Company Report

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Lululemon Earnings: On Track to Meet Expectations Despite Slowdown in Americas; Shares Expensive

David Swartz

After dropping 40% since the beginning of the year, narrow-moat Lululemon’s shares rose 10% in June 5 postmarket trading as its first-quarter results surpassed prior guidance and our estimates. The firm lifted its 2024 EPS outlook to $14.27-$14.47 from $14-$14.20, which should lead us to increase our $285 fair value estimate by a low-single-digit percentage. However, of some concern, sales growth in the Americas (73% of the total) was well below typical double-digit rates; comparable sales in the region were flat. The company cited some shortages of women’s merchandise, but we also think that strong sales of bags over the past year may have masked a slowdown in core leggings. Competition in this category is nothing new, but we think it is intensifying.

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Price vs Fair Value

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LULU is trading at a 687% premium.
Price
$308.27
Fair Value
$294.00
Uncertainty
High
1-Star Price
$493.67
5-Star Price
$989.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Lululemon’s digital sales increased to about $5 billion in 2023 from less than $100 million in 2010 but its stores have remained very productive. Its sales per square foot of about $1,600 are extremely high.

Bears

Leggings and other key Lululemon items are offered by everyone from low-priced fast fashion to luxury apparel brands. The competitiveness of the sportswear industry continues to rise.

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News

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Trading Information

Previous Close Price
$308.27
Day Range
$314.65–337.76
52-Week Range
$293.03–516.39
Bid/Ask
$320.80 / $321.27
Market Cap
$40.70 Bil
Volume/Avg
12.3 Mil / 2.5 Mil

Key Statistics

Price/Earnings (Normalized)
23.64
Price/Sales
3.98
Dividend Yield (Trailing)
—
Dividend Yield (Forward)
—
Total Yield
1.97%

Company Profile

Lululemon Athletica designs, distributes, and markets athletic apparel, footwear, and accessories for women, men, and girls. Lululemon offers pants, shorts, tops, and jackets for both leisure and athletic activities such as yoga and running. The company also sells fitness accessories, such as bags, yoga mats, and equipment. Lululemon sells its products through more than 700 company-owned stores in about 20 countries, e-commerce, outlets, and wholesale accounts. The company was founded in 1998 and is based in Vancouver, Canada.
Sector
Consumer Cyclical
Industry
Apparel Retail
Stock Style Box
Mid Growth
Total Number of Employees
38,000
Website
https://www.lululemon.com

Competitors

Valuation

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Metric
LULU
HBI
BBWI
Price/Earnings (Normalized)
 23.6453.1214.22
Price/Book Value
 9.175.51—
Price/Sales
 3.980.341.45
Price/Cash Flow
 18.2267.7810.13
Price/Earnings
LULU
HBI
BBWI

Financial Strength

Metric
LULU
HBI
BBWI
Quick Ratio
 1.600.510.80
Current Ratio
 2.721.591.57
Interest Coverage
 —0.884.04
Quick Ratio
LULU
HBI
BBWI

Profitability

Metric
LULU
HBI
BBWI
Return on Assets (Normalized)
 28.60%0.33%14.31%
Return on Equity (Normalized)
 47.84%5.66%—
Return on Invested Capital (Normalized)
 35.90%4.80%27.81%
Return on Assets
LULU
HBI
BBWI
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