Market Punishes Lululemon Athletica Inc. (NASDAQ:LULU) For Poor Outlook
Lululemon Athletica Inc. (NASDAQ:LULU) is a Vancouver, Canada based textile company that manufactures and distributes range of athletic apparel and accessories. Under its Lululemon Athletica and Ivivva Athletica brand names, the company operates more than 200 stores across the U.S., Canada, Australia and New Zealand.
Following its 3Q13 earnings release yesterday, the stock of Lululemon Athletica Inc. (NASDAQ:LULU) tumbled more than 11.6% on a poor guidance outlook as it expected same-store sales to be flat in the fourth quarter. The flat sales outlook especially in the quarter that includes almost a month long holiday season was reasonable enough to shatter investor confidence. The stock traded with massive volume of 25.66 million shares, against its 30 day average volume of just about 2.35 million shares.
For 3Q13 ended November 3, 2013 Lululemon Athletica Inc. (NASDAQ:LULU) reported 20% increase in its net revenue to $379.9 million as compared to $316.5 million for 3Q12. Income from operations for 3Q13 also increased 14.6% to $92.3 million on a year over year basis. Gross profit increased 17% for 3Q13 to $204.6 million compared to 3Q12. Diluted earnings for the 3Q13 were $0.45 per share or $66.1 million compared to $0.39 per share or $57.3 million for 3Q12.
Analyst’s Point of View
Recently Zacks analyst Eric Dutram discussed about the possible entry points in the stocks of Lululemon Athletica Inc. (NASDAQ:LULU) and Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA) which has fallen more than 28% following weak 3Q13 earnings release on Dec. 5th.
Recently Zacks Equity Research maintains “Sell” rating for the stock of Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA) and “Hold” rating for Lululemon Athletica Inc. (NASDAQ:LULU)’s stock. Following steep fall in the share prices of these stocks, Dutram discussed the possibility of long term investments in these stocks given their decent growth outlook.