This Day On The Street
Continue to site
ADVERTISEMENT
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

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

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

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

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
GPS $38.62 0.44%
LULU $65.18 0.19%
M $67.44 -0.40%
NKE $109.87 0.40%
UA $84.59 0.39%

Markets

DOW 17,730.11 -27.80 -0.16%
S&P 500 2,076.78 -0.64 -0.03%
NASDAQ 5,009.2140 -3.9090 -0.08%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs