Lululemon's Plan To Double Sales By 2020 Might Not Be Ambitious Enough

Following commendable fourth-quarter results, analysts are looking to the future for Lululemon Athletica inc. LULU. The Q4 results topped the expectations from the Street, with earnings a nickel ahead at $0.85 per share, and revenue $12.07 million ahead at $704.28 million versus expectations at $692.21 million.

In addition to the quarterly results, Lululemon announced plans to double sales in the next four years.

While ambitious, some analysts are saying those plans may not be lofty enough.

Barclays: ‘We Believe LULU Can Exceed Its Plans'

Barclays analyst Matthew McClintock stated affirmed his position that Lululemon has what it takes to more than double sales. "We believe LULU can exceed its plans to double revenue to $4.0 billion by 2020," the analyst began.

Related Link: Most Analysts Raising Targets On Lululemon Following Q4

Justifying his position, McClintock stated, "Top-line growth should be driven by product innovation, square footage growth in North America, digital, and international expansion. Within production innovation, the focus will be on expanding the women's category and improving the tops business. We should begin to see this new assortment starting in 2H16."

McClintock continued, addressing the subsector of womens, mens and e-commerce, calling the goals "conservative."

"We expect meaningful recovery of profitability starting with 2016 and beyond: Starting with 2Q16, the company should reach an inflection point as continued acceleration in comps coupled with improving product margins, better alignment of inventory, and strengthening of supply chain should drive margin recovery," McClintock said. "We believe LULU can grow EPS at least 20 percent per year for the next five years: We believe the company has outlined a reasonable plan for growth by 2020 that has potential for solid upside."

Barclays maintains its Overweight rating on Lululemon, with an attached price target of $85.

At time of writing, Lululemon was down 0.65 percent on the day at $67.16.