Lululemon Athletica inc. (LULU) Has Made Big Strides

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Lululemon Athletica inc. (NASDAQ:LULU) appeared to have made a big strides in the last year. The company has had to bear the brunt of public relations mess apart from missteps hurting its profit, as well as, the reputation. That only enabled its rivals to grab market share from the company. However, the current CEO, Laurent Potdevin, did well to insure the company making big strides revamping the product line. That apart, he also focused on overseas expansion besides moving towards men’s apparel.

Recall of Product

A few years back, Lululemon Athletica inc. (NASDAQ:LULU) had to face the wrath of its customers. That was due to the imprudent remarks by Chip Wilson, the founder, and the product recalls of see-through Luon pants. However, after Potdevin entered the scene towards late 2013, the situation has started to come back somewhat. Now the company seems to be looking fit and raring to go further.

The company was considered as one of the big players in the high-priced yoga apparel market. The bad PR and some missteps have allowed Under Armour Inc (NYSE:UA), Nike Inc (NYSE:NKE) and Gap Inc (NYSE:GPS) to scale up in the market. Even Wal-Mart Stores, Inc. (NYSE:WMT) entered the space to make its presence felt in the market. A slower recovery in the economy also helped rivals to score.

Outlook Boosted

However, Lululemon Athletica inc. (NASDAQ:LULU) bravely faced these odds to come back to lift the profit outlook by a cent. That was due to the better than predicted revenue generation in the first quarter that witnessed 10% growth. Currently, the company expects to deliver earnings of $1.86 – $1.91 a share on $2 – $2.05 billion of revenue for the full year. The yoga apparel firm lifted its revenue forecast from $1.97 – $2.02 billion projected by it earlier.

The company delivered earnings of 34 cents per share while generating $423.5 million of revenue for the first quarter. That came in above the Street expectations of 33 cents a share and revenue of $418.9 million.

Same Store Sales

The yoga apparel firm witnessed double-digit growth in same-store sales for several years with the focus on yoga lovers. That was due to fashionable workout tops, as well as, flexible pants required for the yoga. Additional, the focus on community-building initiatives and yoga classes attracted customers to be loyal. However, the same-store sales started slowing down before the recall of products.

During the first quarter, the company witnessed a 1% drop in its same-store sales in line with the last year’s 1% fall. However, the yoga apparel firm is trying to compensate by pushing menswear. That was quite evident in the first quarter when it was able to notch up 19% growth in same-store sales of menswear. However, it is still not clear whether Lululemon Athletica inc. (NASDAQ:LULU) will be able to reach its historic earnings growth.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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