Lululemon, Who Has Been Weakened By Analysts, Has Delivered Gratifying Results.

Canada

Manufacturer

On Wednesday, financial data for the third quarter of this year were released, both sales and gross margins were higher than analysts' expectations.

After the announcement, Lululemon shares rose 10% to $59.84 a share on Wednesday.

As of October 30th, the key figures for the third quarter of Lululemon were as follows:

Net profit increased 28.5% to 68 million 300 thousand dollars (diluted 50 cents per share) over the same period last year of 53 million 200 thousand US dollars (diluted 39 cents per share), much higher than the 43 cents per share forecast by Townsend analyst.

Sales revenue increased 13.5% to $544 million 400 thousand from $479 million 700 thousand in the same period last year, which is higher than Thomson's earlier forecast of $540 million.

Excluding exchange rate factors, store sales at least one year online and offline grew by 7% over the previous year, higher than analysts' previous forecast of a 5.4% increase.

Gross profit increased by 24% to $278 million 400 thousand over the same period.

Gross profit margin was 51.1%, up from 46.9% in the same period last year.

The short supply chain of Lululemon has become a key factor hindering the development of Companies in recent years. However, this problem has been significantly improved in recent years, and the cost reduction has led to an increase in profit margins.

Subsequently, CEO Laurent Podevin Podevin said at an analyst conference call that the company is now moving towards a five year goal of doubling sales revenue and more than doubled profits.

Among them, the expansion of gross profit margin is a key factor in the growth of profit recovery.

The company's long-term growth strategy includes product innovation, international expansion, and the sales scale of US $1 billion.

Category, strengthen digital business.

CEO said that in 2017, Lululemon will break through innovation in bra category.

At present, sales of branded bra sales have increased by more than 20%, thanks to the company's strategy of "stratified integration" for tops and vests.

For example, light vest with functional bra.

Lululemon's success abroad has made the brand the darling of investors, but inventory problems, product recall scandals and high-level changes in the past few years have affected its once brilliant performance.

The company plans to open two to three stores in Beijing and Shanghai this month, starting with high-end yoga pants to expand niche market.

In the middle of 2017, a global flagship store will be opened in Regent Street, London.

Fourth quarter and full year forecast

During the fourth quarter of November, during the Thanksgiving black Friday, the same store sales grew strongly double-digit year-on-year.

The company expects sales in the fourth quarter to be between $765 million and 7.85 billion, with earnings from 96 cents to $1.01 per share.

Lululemon also raised forecast figures for the whole fiscal year 2016.

Diluted earnings per share ranged from $2.18 to $2.23.

Sales revenue ranged from $2 billion 320 million to $2 billion 340 million.

In addition, the board of directors passed a $100 million common stock buyback plan with a view to creating value for shareholders under favorable market conditions.

Analysts had faltered.

Earlier, analysts predicted that the craze for Yoga Pants represented by tight Yoga Pants seems to have faded.

If the third quarter data released by Lululemon really verified this trend, the mutual fund investors who are busy buying Lululemon shares in recent months will be in a cold sweat.

But it turns out that Lululemon has not disappointed investors.

According to the world clothing and shoe net, since the end of August this year, Lululemon's share price has fallen by 30%. Mutual funds have chosen to buy this opportunity.

Such a decline in share prices has reduced the Lululemon P / E P / E ratio to 23 times, which is lower than the five year average (29 times).

According to the world clothing and shoe net, last quarter, 86 mutual funds became new buyers of Lululemon shares, and 58 funds chose to sell.

According to the documents provided by the securities regulatory authorities, Baird and Dreyfus two funds took the lead in buying Lululemon shares in September.

According to the report in October, the Fidelity fund held the Lululemon 15% stake as the largest investor in the latter, and the regulatory documents in October 7th indicated that the private equity Advent International had the stake in the brand 15.8%.

According to the world clothing and shoe net, at least two stock analysts have lowered their expectations of Lululemon's stock rating. They believe that in the past ten years, the company has made the casual sportswear category very popular, and now the female consumers are losing interest in this category.

Lululemon's current competitors include sports equipment giants like Under Armour and Nike, as well as a large number of new sportswear brands that are more popular with people.

Canaccord analyst Camilo Lyon downgraded Lululemon's stock rating from "hold" to "sell" last week.

The reason given is that consumer preferences are turning from leisure sports to jeans.

According to the world clothing and shoe net, a typical Lululemon customer typically bought 4 brands of yoga pants in 2016. In 2017, the number of purchases she purchased would be reduced to 3, which would cause the company to lose 127 million US dollars in sales revenue.

Analyst Betty Chen recently lowered the target price of Lululemon from $68 per share to $60 per share.

She believes that female consumers are more fond of broken hole cowboy style or retro Adidas and Puma sports.

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