This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Lululemon Still In 'Warm-Up' Phase of Growth Story

Chen also believes that the company's luon pant mishap earlier this year was short-term glitch. Despite product quality concerns, "the company has implemented more stringent testing since the 'transparent' pants situation," the note says.

The company was forced to pull the popular pants in March after complaints that the pants were too sheer. It restocked shelves with its black luon yoga pants in June.

Investors will hopefully get an update to the CEO search and luon-pant ongoing affects when lululemon reports second-quarter earnings on Thursday.

Analysts, according to Thomson Reuters, expect the company to post earnings of 35 cents a share, 10% lower than the year-earlier period. Revenue is expected to rise 21% to $343 million.

Janney Capital Markets analysts Adrienne Tennant and Gabrielle Carbone write in a research note on Monday that with the luon pant replenishment occurring earlier than expected in late May to early June (rather than early August), it is possible that second-quarter sales have benefited, however lululemon was not likely to escape the weak mall traffic affecting all retailers this summer. Tenant and Carbone rate the company at "buy."

"We continue to believe LULU remains an attractive longer-term, global growth story; however, we believe meaningful contribution from new regions of growth are still several years away," the Janney note says. "In the near-term, we expect the stock to be volatile, and potentially range-bound, as the company seeks to find a new CEO, fill other open positions, pressures the fixed expense structure with investments for growth, and works to reaccelerate comp and margin expansion."

"We are maintaining our buy rating on a longer-term basis, but believe that consensus estimates should be reset to allow the company room to fund the proper infrastructure and foundation from which to grow," the note says.

-- Written by Laurie Kulikowski in New York.

To contact Laurie Kulikowski, send an email to: Laurie.Kulikowski@thestreet.com.

>To submit a news tip, email: tips@thestreet.com.



Follow TheStreet on Twitter and become a fan on Facebook.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.
2 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,106.70 +29.83 0.17%
S&P 500 2,000.02 +2.10 0.11%
NASDAQ 4,570.6370 +13.29 0.29%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs