The Canadian yoga-wear retailer,
Lululemon Athletica Inc.
) updated its fourth-quarter fiscal 2012 guidance on Monday. The
holiday season is over and most of the companies have obtained a
fair idea regarding their fourth-quarter performance; hence, they
are updating their forecasts for the quarter.
On the back of high-single-digit sales growth expectation at
comparable-stores (comps), the company anticipates its revenue
for the fourth quarter to be at the higher-end of previously
guided range of $475-$480 million.
Moreover, Lululemon has raised its earnings guidance to 74
cents per share, up from its earlier guidance range of 71-73
cents per share. Further, the company revealed that gross margin
is expected to be somewhat ahead of the forecast and inventories
However, despite the upbeat fourth-quarter guidance, the
shares of Lululemon tumbled approximately 6.9% to $67.31 on
Monday in the after-hour market trading, as the provided outlook
remains below the analysts' expectations. The current Zacks
Consensus Estimates for revenue and earnings per share are pegged
at $489 million and 74 cents, respectively.
Moreover, looking at Lululemon's past comps performances, its
comps growth has slowed sharply. In the trailing six quarters,
the company registered an average comps growth of approximately
We believe that Lululemon has the ability to drive impressive
top-line growth by focusing on e-Commerce retailing channel,
international expansion and investment in innovating newer
product categories. Further, the company is well positioned to
attract new consumers due to a shift in focus of the consumers
toward a healthy lifestyle.
However, we remain slightly cautious over the stock due to
sluggish comps growth and intense competition. Thus, we are
maintaining a long-term 'Neutral' recommendation on the
Currently, Lululemon holds Zacks Rank #3 (Hold). The company
mainly competes with
Under Armour Inc.
) having Zacks Rank #2 (Buy) and #4 (Sell), respectively.
LULULEMON ATHLT (LULU): Free Stock Analysis
NIKE INC-B (NKE): Free Stock Analysis Report
UNDER ARMOUR-A (UA): Free Stock Analysis
To read this article on Zacks.com click here.