The newest quarter was a tough one for Lululemon Athletica Inc., simply because it was for many retailers throughout the coronavirus pandemic, however analysts record a lot of ways in which Lululemon excelled, with Susquehanna Monetary Group giving the corporate prime marks.
“Lululemon has managed through the crisis better than every company in our coverage universe (with Nike perhaps the lone exception),” wrote analysts led by Sam Poser. “Lululemon has cemented its position as the best publicly-traded company in the specialty retailer sector, in our view.”
Lululemon
LULU,
-3.81%
reported a 17% income decline within the first-quarter to $652 million, lacking the FactSet consensus for $692 million. Earnings per share of 22 cents have been forward of FactSet expectations for 20 cents.
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Regardless of the gross sales miss, analysts spotlight scores of causes to be optimistic in regards to the long-term way forward for the corporate.
“Lululemon continues to develop guest relations and drive sales with its digital platforms through the evolving productivity of its CRM [customer relationship management] capabilities in the face of store closures,” wrote Susquehanna.
“Lululemon remains one of few companies out there that will emerge from the COVID-19 crisis stronger than it was when the crisis began.”
Susquehanna charges Lululemon stock optimistic with a $360 price goal, up from $240.
Raymond James analysts word that Lululemon continued to pay its employees and didn’t take an enormous earnings hit within the course of.
“[W]e point to the fact that Lululemon was able to pay its associates despite stores being closed for much of the quarter while still delivering a healthy profit, an impressive feat for any retailer,” analysts wrote.
Raymond James charges Lululemon stock robust purchase with a $335 price goal.
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Along with paying its employees, Lululemon’s Chief Govt Calvin McDonald factors out that the corporate additionally continued to pay its lease and its distributors for merchandise.
“We believe that by supporting our collective and helping them navigate the day-to-day realities of this period, we will build even stronger relationships and increase the already strong loyalty and trust in Lululemon,” McDonald mentioned, in accordance with a FactSet transcript.
“These decisions are right for our people and right for our brand.”
Analysts at MKM Companions see these actions as insurance coverage for the long run.
“Unlike select peers who cut back orders suddenly and sharply, Lululemon honored its commitments with vendors, which we believe will strengthen its relationships/vendor loyalty (this could be a risk factor for others, and particularly if vendors go out of business),” analysts mentioned.
MKM charges Lululemon stock purchase with a $378 12-month goal and recommends traders “buy on any weakness.”
Lululemon stock is down 4.7% in Friday buying and selling, however up 26.8% for the yr up to now.
The S&P SPDR Retail ETF
XRT,
+1.10%
is down 12% for 2020 up to now. And the S&P 500 index
SPX,
+1.30%
has tumbled 6.5% for the interval.
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Wedbush analysts word that “no additional markdown was taken” throughout the quarter. And Bank of America says that stock grew 41% year-over-year, however there’s little hazard of that merchandise being offered at fire-sale costs.
“Unlike nearly every other retailer, Lululemon did not take a writedown but instead acted quickly to align future orders with new demand levels,” analysts led by Rafe Jadrosich wrote. “Product teams were also able to restage deliveries and will now stagger new releases during the remainder of the year.”
Furthermore, a lot of its merchandise isn’t particular to any season, some extent that Lululemon’s McDonald centered on.
“We benefit from an inventory with relatively high percentage core product; about 40% overall, that has a shelf life beyond the current season and with limited markdown risk,” he mentioned.
Wedbush charges Lululemon stock impartial with a $300 price goal. Bank of America charges Lululemon shares purchase with a $340 price goal.
