NEW YORK (TheStreet) -- Wall Street is wondering whether Lululemon Athletica (LULU) has any tricks up its sleeve that will help reverse the stock's downward spiral when the Vancouver-based yoga apparel retailer reports fiscal-second quarter results on Thursday. Analysts remain concerned that the company has not done enough to spruce up its product assortment that would inspire any significant sales growth.
The women's activewear category has become increasingly competitive with rival Under Armour (UA) , Gap's (GPS) Athleta, Nike (NKE) , VF Corp. (VFC) and more fashion-forward companies like H&M all playing in the space. Lululemon has not been able to regain the traction it had following its yoga pant recall in March 2013.
Lululemon's same-store sales growth, a measure that explains how sales in stores open at least a year are faring, is expected to fall 3.5%, according to estimates tallied by Thomson Reuters.
Analysts' consensus estimate is calling for Lululemon's quarterly profit to decline approximately 25% from last year to 29 cents a share. Though revenue is expected to rise 9% to $377 million, according to Thomson Reuters.
Shares of Lululemon have fallen 34% this year compared to Under Armour, which has seen its shares surge 65% in the same time period. Here's what analysts are saying about Lululemon's earnings.
Faye Landes, Cowen & Co. (Market Perform; $38 PT)
We are forecasting in-line Q2 results, with comps of (3%) on a constant currency basis, as LULU proceeds through its "transitional" year. Lack of fashion newness likely hurt results in the Q. We think LULU's lofty valuation reflects an unrealistic expectation of a sharp rebound in operating margins, but with short interest at 23%, even a whiff of good news or change may drive the stock higher.
This morning we published a companion note, sharing results from the Cowen Consumer Tracking Survey that indicate that LULU's core customer base, affluent women, still has a tight bond with the brand. Translating that bond into sales may have been, and may continue to be, tough given a notable lack of newness at LULU stores, and more fashion at competitors who are outflanking LULU both from below (e.g., Athleta, Gap Fitness) and above (e.g., Sweaty Betty and Lole), but it is encouraging to see that the brand's core constituency still likes LULU.
Read More: Cramer: Apparel Stocks Are Hot