Investors Learning to Live with Disappointment in Lululemon (LULU)

Source: lululemon

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