Lululemon Guidance Disappointment, Another Opportunity to Revist Growth

By Jon C. Ogg Published Jan 15, 9:10AM EST

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

Lululemon Athletica Inc. (NASDAQ: LULU) is seeing its shares battered this morning after the company’s earnings forecast is just not enough to keep the buzz going here. What is interesting is that analysts and investors had been operating under the assumption that Lululemon’s supply chain was expanded in a manner that would let it meet higher demand. The drop we are seeing today may be a case of good is just not good enough.

The yoga-themed retail destination said that its fourth-quarter sales will be at the high-end of its original forecast of $475 million to $480 million. The problem is that consensus was looking more like $489 million. The bar has been set high for this major growth company. This is also the company’s key fourth quarter, which adds so much to the annual numbers. The company’s earnings also will come in around the $0.74 EPS that matches the consensus reading.

Shares are down 6.2% at $67.82 on the news in active trading, after closing at $72.30 on Monday. Lululemon has a 52-week range of $52.20 to $81.09, but it also had a market cap of $10.4 billion before today’s drop in the shares.

Some investors may feel that the discount off of the year high was enough of a pullback, but that might not be the case as this one has risen massively. As far as valuation, this one also trades at 38-times earnings and more than 7.5-times revenues. Those are both huge premiums for the apparel and retail sectors.

Thomson Reuters has a consensus price target for Lululemon is $81.81 before the effects of this drop.

DISCLOSURE:

Customer must fund their Active Invest account with at least $50 within 45 days of opening the account. Receive a minimum of $15. Probability of member receiving $3,000 is a probability of 0.026% If you don’t make a selection in 45 days, you’ll no longer qualify for the promo. Percentages for the $3,000 are subject to decrease. See full terms and conditions.

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE Brokerage and Active investing products offered through SoFi Securities LLC, member FINRA(www.finra.org)/SIPC(www.sipc.org). Advisory services are offered by SoFi Wealth LLC, an SEC-registered investment adviser. Information about SoFi Wealth’s advisory operations, services, and fees is set forth in SoFi Wealth’s current Form ADV Part 2 (Brochure), a copy of which is available upon request and at www.adviserinfo.sec.gov. Probability of Member receiving $1,000 is a probability of 0.026%; If you don’t make a selection in 30 days, you’ll no longer qualify for the promo. Customer must fund their account with a minimum of $50.00 to qualify. Other fees, such as exchange fees, may apply. Please view our fee disclosure to view a full listing of fees. Investing in alternative investments and/or strategies may not be suitable for all investors and involves unique risks, including the risk of loss. An investor should consider their individual circumstances and any investment information, such as a prospectus, prior to investing. Interval Funds are illiquid instruments, the ability to trade on your timeline may be restricted. Brokerage and Active investing products offered through SoFi Securities LLC, Member FINRA(www.finra.org) /SIPC(www.sipc.org). There are limitations with fractional shares to consider before investing. During market hours fractional share orders are transmitted immediately in the order received. There may be system delays from receipt of your order until execution and market conditions may adversely impact execution prices. Outside of market hours orders are received on a not held basis and will be aggregated for each security then executed in the morning trade window of the next business day at market open. Share will be delivered at an average price received for executing the securities through a single batched order. Fractional shares may not be transferred to another firm. Fractional shares will be sold when a transfer or closure request is initiated. Please consider that selling securities is a taxable event. Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire investment Before trading options please review the Characteristics and Risks of Standardized Options Investing in an Initial Public Offering (IPO) involves substantial risk, including the risk of loss. Further, there are a variety of risk factors to consider when investing in an IPO, including but not limited to, unproven management, significant debt, and lack of operating history. For a comprehensive discussion of these risks please refer to SoFi Securities’ IPO Risk Disclosure Statement This should not be considered a recommendation to participate in IPOs and investors should carefully read the offering prospectus to determine whether an offering is consistent with their investment objectives, risk tolerance, and financial situation. New offerings generally have high demand and there are a limited number of shares available for distribution to participants. Many customers may not be allocated shares and share allocations may be significantly smaller than the shares requested in the customer’s initial offer (Indication of Interest). For more information on the allocation process please visit IPO Allocation.

Follow 24/7 Wall St. on Google

About the Author Jon C. Ogg →

Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. www.247wallst.com.