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Lululemon Athletica – more of a lemon than a lulu
Lululemon Athletica Inc (NASDAQ:LULU, TSE:LLL) stumbled in early trading Thursday after fourth quarter results had brokers rushing to downgrade price targets.
The sportswear maker’s shares lost more than fifth of their value, slumping to US$51.79 on negative reaction to last night’s earnings update.
It was not so much the fourth quarter numbers that spooked the market as the current trading update.
Net revenue in the fourth quarter of the year to 29 January was up 12% to US$789.9mln from US$704.3mln the year before, but US$6.3mln lower than the consensus Street estimate.
Like-for-like (LFL) sales, including direct-to-consumer sales, were up 8% year-on-year, or 7% on a constant currency basis. Excluding direct sales, LFL turnover was up 6% from a year earlier.
Adjusted earnings per share clocked in at a round dollar, up from 85 cents the year before, and one cent below the US$1.01 the market had been expecting.
For the first quarter of fiscal 2017, the company expects net revenue to be in the range of US$510 million to US$515 million based on a total LFL sales decrease in the low-single digits on a constant currency basis.
Diluted earnings per share are expected to be in the range of US$0.25 to US$0.27 for the quarter.
“2016 marks a milestone year where our successful execution against long-term strategies returned the company to positive operating income growth for the first time in three years. These results reflect our strong brand and solid foundation now in place to drive our future performance,” said Lululemon’s chief executive, Laurent Potdevin.
“Although we’ve had a slow start to 2017, our teams are passionately committed to delivering on our robust plans across product innovation, digital, North America and international as we realize our ambitious vision for the future,” he added.
Instinet responded by cutting its price target to US$65 from US$72, while heavyweight bank JP Morgan cut its target to US$66 from US$78.
Story by ProactiveInvestors
Source: http://www.proactiveinvestors.com/companies/news/175703/lululemon-athletica-more-of-a-lemon-than-a-lulu-175703.html
