Lulu's Fashion Lounge: Strategic Discounts And Unique Strategies To Weather The Storm In 1Q23, Analyst Says - Lulus Fashion Lounge (NASDAQ:LVLU)

Telsey Advisory Group analyst Dana Telsey reiterated an Outperform rating on the shares of Lulu’s Fashion Lounge Holdings Inc LVLU with a price target of $5.
LVLU will report 1Q23 results after the market close on Tuesday, May 9.
The analyst is looking for 1Q23 adjusted EBITDA of $2.0 million versus $9.9 million last year and the consensus of $2.2 million.
The analyst sees sales to decline 14.9% YoY to $95.2 million, slightly ahead of the consensus of $93.9 million.
As of mid-March, Q1-to-date sales trends were tracking down mid-to-high-teens from last year’s 62% comparable sales, due to fewer wedding-related events and ongoing macro pressures, said the analyst.
The analyst added that this reflects a sequential deceleration from 4Q22's 6.0% YoY revenue decline primarily attributable to slower order frequency.
Given the industry's elevated promotional levels, LVLU has been strategic with its discounts to remain relevant to cautious consumers but not uncharacteristically promotional, noted the analyst.
Revenue growth is expected to rebound to positive in the back half of the year, as the first half faces tough comparisons from pent-up demand for special occasion apparel.
While the LVLU customer is exposed to macro pressures, the analyst sees wedding/event cycle and digital/physical channel normalizations as more temporary volatility factors, which have clouded visibility for FY23 when combined with macro concerns and the broader promotional landscape.
The analyst continues to see LVLU's nimble model as well positioned to deliver sustained growth.
The analyst sees company’s unique “test, learn, and reorder” strategy as a competitive advantage.
Also, there is less inventory obsolescence associated with LVLU's assortment compared to many fashion retailers, noted the analyst.
Price Action: LVLU shares are trading lower by 2.24% at $2.18 on the last check Tuesday.

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