Apparently, not everyone is sporting Lululemon (LULU) yoga pants to the gym as they fulfill their New Year’s resolution to get in shape. While the athletic company reported it’s on track for December sales, this month LULU has already seen sales, “decelerate meaningfully,” as stated by Chief Finance Officer John Currie. While some analysts are heading these signs as a tale of caution, recommending SELL LULU, other analysts are preparing for a potential bounce back, recommending HOLD or BUY LULU.
Stern Agee analyst Sam Poser has reviewed the evidence and believes SELL LULU is the best way to handle the situation. Sam cut his price target from $56 to $47 stating, “LULU is having trouble attracting new customers, a sign that the brand is weakening.” Sam is even more concerned about the decrease in sales due to the fact that the fitness industry is currently a healthy segment in the market. Sam adds that, “If LULU does not regain that special in-store experience and customer connection, the brand’s relevance will be at risk, regardless of supply chain improvements.” Sam is ranked 312 out of 2337 analysts and has a +2.0% average return over S&P-500.
And, while analyst Faye Landes did reduce her price target from $90 to $48, she still believes that the company has a chance and recommends HOLD LULU. Faye has chosen to put a unique spin on the company’s predicament, hypothesizing, “Maybe Lulu customers have shifted to more of a replacement than stock-up mode, which would mean fewer sales per person, and maybe competition is taking little bites out of Lulu’s business, especially among less hard-core customers.” Faye is ranked 1880 out of 2337 analysts and has a -6.5% average return.
Within the same vein, analyst Dorothy Lakner believes that LULU’s results were not “disastrous” and advises BUY LULU. Dorothy notes that January is a tough retail month following the holidays, but her firsthand account of a busy LULU store has subdued her fears, “While LULU was in line with its previous guidance at the end of December–a difficult month for most retailers–January seems to have been more difficult, with traffic and sales trends decelerating meaningfully. This surprised us, given a store check this past weekend where LULU seemed very crowded with shoppers making purchases, perhaps even more so than in December, with most product at full price.” Dorothy is ranked 2131 out of 2337 analysts and has a -3.9% average return over S&P-500.
Whether you have purchased LULU apparel recently (or not), the stock is being put through some serious calisthenics. To continue following these analyst recommendations, as well as other analyst portfolios, download TipRanks today, and start making informed financial decisions.
