NEW YORK (TheStreet) -- Lululemon Athletica (LULU) - Get Report was able to drive holiday sales without markdowns, according to Wedbush, but FBR Capital notes that the retailer had a "huge" clearance sale the day after Christmas.
Unlike its mall-based peers, Lululemon was able to attract holiday shoppers without promotions on Christmas weekend, Wedbush argues, Barron's reports. Rival Lorna Jane ran a 20% store-wide promotion, while Gap's (GPS) Athleta brand marked many items down 20%.
Most Lululemon stores did not discount items ahead of Christmas, and even some of the company's clearance stores neglected to mark down items from December 22 to 26, Wedbush notes.
However, Lululemon's clearance sale on December 26 was larger than normal, with 19 racks of sales items compared to three racks last year, FBR Capital argues.
Based in Vancouver, Lululemon is a designer and retailer of technical athletic apparel.
Shares of the company closed down 0.04% to $53.17 in Monday's trading session.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate LULULEMON ATHLETICA INC as a Hold with a ratings score of C+. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and feeble growth in the company's earnings per share.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- LULU's revenue growth has slightly outpaced the industry average of 12.4%. Since the same quarter one year prior, revenues rose by 14.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- LULU has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, LULU has a quick ratio of 2.00, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for LULULEMON ATHLETICA INC is rather high; currently it is at 50.97%. Regardless of LULU's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, LULU's net profit margin of 11.08% compares favorably to the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed compared to the Textiles, Apparel & Luxury Goods industry average, but is greater than that of the S&P 500. The net income has decreased by 12.1% when compared to the same quarter one year ago, dropping from $60.45 million to $53.15 million.
- Net operating cash flow has significantly decreased to -$6.22 million or 114.51% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full analysis from the report here: LULU