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Lululemon Athletica Inc LULU

Rating as of

Morningstar’s Analysis

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1-Star Price

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5-Star Price

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Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Lululemon’s E-Commerce Continues to Shine but Expenses Impact Margins; Shares Very Overvalued

David Swartz Equity Analyst

Analyst Note

| David Swartz |

Narrow-moat Lululemon’s earnings in 2020’s fourth quarter were largely in accord with its January announcement and our forecast. Specifically, its adjusted EPS of $2.58 was slightly above our $2.53 estimate even as its costs rose more than expected on heavy marketing of Mirror and pandemic-related expenses. Although we expect to lift our $155 per share fair value estimate on Lululemon by a mid-single-digit percentage, we continue to view its shares as overvalued at roughly 50 times expected 2021 EPS.

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Company Profile

Business Description

Lululemon Athletica Inc. designs, distributes, and markets athletic apparel 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 500 company-owned stores in 17 countries, e-commerce, outlets, and wholesale accounts. The company was founded in 1998 and is based in Vancouver, Canada.

Contact
1818 Cornwall Avenue
Vancouver, BC, V6J 1C7
T +1 604 732-6124
Sector Consumer Cyclical
Industry Apparel Retail
Most Recent Earnings Jan 31, 2021
Fiscal Year End Jan 31, 2022
Stock Type Cyclical
Employees 25,000

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