NEW YORK (TheStreet) - Wall Street is waiting to see if Lululemon (LULU) has finally been able to put its troubles behind it. They will get some answers when the yoga apparel maker reports quarterly results on Thursday.
Lululemon has seen shares sink 22% this year as it faces intense competition from Nike (NKE) and Under Armour (UA) . This follows a dismal 2013 in which the retailer had to recall its Luon pant, one of its most popular products, over complaints that the material being used to make it was too sheer. Sales have been suffering since then.
Analysts expect Lululemon to post earnings of 38 cents a share for its fiscal third quarter, 16% lower than earnings in the year-earlier quarter. Sales are expected to rise 12% to $425 million, according to Thomson Reuters. Here's what analysts had to say going into the quarter:
Paul Lejuez, Wells Fargo Securities (Upgraded to Outperform, $50-$54 valuation range)
We are upgrading LULU from Market Perform to Outperform. Over the years, we have always viewed LULU as an attractive sq ft growth story, but product/sourcing issues and management turnover made us less confident in the company's ability to execute its store growth plans. Now with much of the work on the supply chain in process or complete and with merchandise margins seemingly near an inflection point, we believe the underlying growth story will come into greater focus. We are raising our 2015E from $1.88 to $2.06 and our valuation range from $38-42 to $50-54.