Analyst Note| David Swartz |
As expected, Lululemon’s store sales were affected by coronavirus-related shutdowns in the second quarter of 2020, but 155% e-commerce sales growth allowed it to surpass our sales and profit estimates. However, without offering formal guidance, it was cautious on the second half of the year as store productivity is running at only about 75% of last year. Lululemon’s shares dropped about 6% in post-market trading on this news after a 3% decline in the regular session. We expect to raise our per share fair value estimate of $142 by a low-single-digit percentage but continue to view shares as very overvalued.