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Most Investors Underappreciate Lululemon's Recent Supply Chain Fixes

Most Investors Underappreciate Lululemon's Recent Supply Chain Fixes

Lululemon Athletica inc. (NASDAQ: LULU) is scheduled to report its FYQ1 results on June 8.

FYQ1 Expectations

BlueFin’s Rebecca Duval believes that the FYQ1 sales might have been better than expected, while the EPS was likely to be in line with the consensus.

Duval mentioned that channel checks indicate that the quarter was a strong one for Lululemon, benefitting from robust and better than anticipated customer response to the introduction of new tank tops, updated core pants, seasonal merchandise and men’s apparel.

“In addition, sources indicate that LULU did a great job clearing inventory at the end of March/early April; to the point where they think inventory is back in-line to where it should be considering the level of sales and sales growth,” according to the BlueFin report.

FYQ2 Guidance Expectations

“We also expect management to be optimistic about the conversion rates and sell-through activity for the first month of FYQ2 and think sales and EPS guidance will be in-line with consensus estimates of $515 million and $0.39, respectively,” the analyst stated.

If this occurs, Duval believes that it would be well received by investors, given that most retailers have been revising their FYQ2 guidance down.

“We don’t think most investors truly appreciate the supply chain fixes that LULU has done and the meaningful cost saving benefits in FY16 that will come about from it,” Duval pointed out.

Latest Ratings for LULU

Jun 2019MaintainsNeutral
Jun 2019MaintainsBuy
Jun 2019MaintainsBuy

View More Analyst Ratings for LULU
View the Latest Analyst Ratings

Posted-In: BlueFin Research Partners Rebecca DuvalAnalyst Color Analyst Ratings Best of Benzinga


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