Investors Learning to Live with Disappointment in Lululemon (LULU)

Retail

Published: December 1, 2011 9:02 am

Last Updated: April 27, 2020 11:41 pm

Source: lululemon

Lululemon Athletica Inc. (NASDAQ: LULU) is getting blasted this morning on its guidance after earnings. Nothing can last forever, maybe not even the endless exponential growth of yoga.

The yoga and exercise themed retailer reported that its third quarter earnings came in at $0.27 EPS, up from $0.18 EPS a year ago and versus $0.25 EPS expected from Thomson Reuters. Revenue rose 31% to $230.2 million, but this was against estimates of $235.7 million even if its same-store sales in the quarter rose by 16%.

As far as guidance, the company sees its fourth quarter gains in the low to mid-teens for its same-store sales. Lululemon also said that it saw no substantial pickup in same-store sales in the current quarter as the prior quarter gains were 20%.

The stock is getting pounded on light revenues and declining same-store sales growth. In the pre-market we show that shares are down 12% at $43.65 and the volume is nearing 1 million shares with more than 30 minutes until the market opens. Lulu’s 52-week trading range is $25.82 to $64.49 and the consensus price target from Thomson Reuters was $56.00 before the effects of today’s earnings report.

Nothing lasts forever, even if it is a hard lesson to learn when growth stocks start to see a less robust growth picture after consistently beating estimates in the past.

JON C. OGG

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