We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
lululemon (LULU) Stock on Growth Trajectory: Should You Buy?
Read MoreHide Full Article
lululemon athletica (LULU - Free Report) has been on investors’ good books on the back of its Power of Three ×2 growth strategy. The company has been capitalizing on the importance of physical retail and the convenience of online engagement, which is expected to boost its performance. Continued business momentum, and robust traffic trends in stores and e-commerce bode well.
Driven by these factors, lululemon reported the fifth straight quarter of a sales and earnings surprise in first-quarter fiscal 2023. The top and bottom lines also grew year over year on the back of continued business momentum and innovative products. Comp growth was aided by robust traffic trends in stores.
The Zacks Rank #2 (Buy) stock has rallied 38% in the past year compared with the industry’s growth of 7%. The stock also compared favorably with the Consumer Discretionary sector’s growth of 10.6% and the S&P 500’s rally of 15.7%.
An uptrend in the Zacks Consensus Estimate for LULU echoes a positive sentiment. The Zacks Consensus Estimate for lululemon’s fiscal 2023 sales and earnings per share (EPS) suggests growth of 17.1% and 18.4%, respectively, from the year-ago period’s reported numbers.
Image Source: Zacks Investment Research
What’s Working Well for LULU?
Lululemon’s Power of Three ×2 growth strategy positions it for robust growth in the long term. The company’s progress on this strategy, focused on doubling its revenues from $6.25 billion in 2021 to $12.5 billion by 2026, has been a key driver for the company. The strategy revolves around three key growth drivers, including product innovation, guest experience and market expansion.
The five-year plan is likely to quadruple international sales, along with doubling digital and menswear sales. Also, the women’s business and North America operations are each anticipated to witness a low-double-digit CAGR in revenues, with store channel growth in the mid-teens in the next five years. As part of its strategy, the company intends to expand in China and Europe markets, with plans to open stores in Spain and Italy.
For 2021-2026, total net revenues, on a five-year CAGR basis, are expected to be up 15%, with a slight expansion in the operating margin on an annual basis. lululemon anticipates bottom-line growth to outpace revenue growth. Although the 2026 targets seem too bold, the company believes that these are achievable due to its strong financial position.
Additionally, LULU’s intent of capturing the growing online demand and ensuring a robust shopping experience through its accelerated e-commerce investments keeps it on track for growth. It has been investing in developing sites, building transactional omni functionality and increasing fulfillment capabilities.
The company continues to strengthen omni-channel capabilities, such as curbside pickups, same-day deliveries and buy online pick up in store. It is enhancing its mobile app in a bid to offer the curbside pickup service and train its store associates to help customers speed up transactions. Free online digital educator service for people that can't make it into its stores bodes well.
LULU is poised to benefit from increased store traffic as consumers return to stores for shopping. At the store level, comparable store sales increased 13% year over year and 16% on a constant-dollar basis in the fiscal first quarter. The company witnessed more than 30% traffic growth at stores.
lululemon continues to be focused on investments to enhance the in-store experience. It is leveraging its stores to facilitate omni-channel capabilities, including the buy online pickup in store and ship-from-store.
The company has implemented several strategies to improve guest experience and reduce wait time. These include virtual waitlist, mobile POS and appointment shopping. These functionalities enable reducing the wait time to enter the store, and allow customers to complete some transactions like returns, exchanges and purchase of gift cards without entering the store. lululemon continues expanding its store base.
Other Stocks to Consider
Some other top-ranked stocks are GIII Apparel Group (GIII - Free Report) , Bluegreen Vacations and Royal Caribbean Cruises (RCL - Free Report) .
GIII Apparel sports a Zacks Rank #1 (Strong Buy) at present. Shares of GIII have declined 1.6% in the past year. The company has a trailing four-quarter earnings surprise of 47.4%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for GIII’s current-year sales and EPS suggests growth of 1.9% and 0.4%, respectively, from the year-ago reported figures. It has a long-term earnings growth rate of 15%.
Bluegreen currently flaunts a Zacks Rank #1. BVH has a trailing four-quarter earnings surprise of 24.7%, on average. Shares of BVH have rallied 35.3% in the past year.
The Zacks Consensus Estimate for Bluegreen’s current financial-year sales and earnings suggests growth of 3.6% and 17.6%, respectively, from the year-ago period's reported figure.
Royal Caribbean currently sports a Zacks Rank of 1. RCL has a trailing four-quarter earnings surprise of 26.4%, on average. Shares of RCL have rallied 195.4% in the past year.
The Zacks Consensus Estimate for Royal Caribbean’s current financial-year sales and EPS suggests growth of 48.7% and 162.9%, respectively, from the year-ago period's reported numbers.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
lululemon (LULU) Stock on Growth Trajectory: Should You Buy?
lululemon athletica (LULU - Free Report) has been on investors’ good books on the back of its Power of Three ×2 growth strategy. The company has been capitalizing on the importance of physical retail and the convenience of online engagement, which is expected to boost its performance. Continued business momentum, and robust traffic trends in stores and e-commerce bode well.
Driven by these factors, lululemon reported the fifth straight quarter of a sales and earnings surprise in first-quarter fiscal 2023. The top and bottom lines also grew year over year on the back of continued business momentum and innovative products. Comp growth was aided by robust traffic trends in stores.
The Zacks Rank #2 (Buy) stock has rallied 38% in the past year compared with the industry’s growth of 7%. The stock also compared favorably with the Consumer Discretionary sector’s growth of 10.6% and the S&P 500’s rally of 15.7%.
An uptrend in the Zacks Consensus Estimate for LULU echoes a positive sentiment. The Zacks Consensus Estimate for lululemon’s fiscal 2023 sales and earnings per share (EPS) suggests growth of 17.1% and 18.4%, respectively, from the year-ago period’s reported numbers.
Image Source: Zacks Investment Research
What’s Working Well for LULU?
Lululemon’s Power of Three ×2 growth strategy positions it for robust growth in the long term. The company’s progress on this strategy, focused on doubling its revenues from $6.25 billion in 2021 to $12.5 billion by 2026, has been a key driver for the company. The strategy revolves around three key growth drivers, including product innovation, guest experience and market expansion.
The five-year plan is likely to quadruple international sales, along with doubling digital and menswear sales. Also, the women’s business and North America operations are each anticipated to witness a low-double-digit CAGR in revenues, with store channel growth in the mid-teens in the next five years. As part of its strategy, the company intends to expand in China and Europe markets, with plans to open stores in Spain and Italy.
For 2021-2026, total net revenues, on a five-year CAGR basis, are expected to be up 15%, with a slight expansion in the operating margin on an annual basis. lululemon anticipates bottom-line growth to outpace revenue growth. Although the 2026 targets seem too bold, the company believes that these are achievable due to its strong financial position.
Additionally, LULU’s intent of capturing the growing online demand and ensuring a robust shopping experience through its accelerated e-commerce investments keeps it on track for growth. It has been investing in developing sites, building transactional omni functionality and increasing fulfillment capabilities.
The company continues to strengthen omni-channel capabilities, such as curbside pickups, same-day deliveries and buy online pick up in store. It is enhancing its mobile app in a bid to offer the curbside pickup service and train its store associates to help customers speed up transactions. Free online digital educator service for people that can't make it into its stores bodes well.
LULU is poised to benefit from increased store traffic as consumers return to stores for shopping. At the store level, comparable store sales increased 13% year over year and 16% on a constant-dollar basis in the fiscal first quarter. The company witnessed more than 30% traffic growth at stores.
lululemon continues to be focused on investments to enhance the in-store experience. It is leveraging its stores to facilitate omni-channel capabilities, including the buy online pickup in store and ship-from-store.
The company has implemented several strategies to improve guest experience and reduce wait time. These include virtual waitlist, mobile POS and appointment shopping. These functionalities enable reducing the wait time to enter the store, and allow customers to complete some transactions like returns, exchanges and purchase of gift cards without entering the store. lululemon continues expanding its store base.
Other Stocks to Consider
Some other top-ranked stocks are GIII Apparel Group (GIII - Free Report) , Bluegreen Vacations and Royal Caribbean Cruises (RCL - Free Report) .
GIII Apparel sports a Zacks Rank #1 (Strong Buy) at present. Shares of GIII have declined 1.6% in the past year. The company has a trailing four-quarter earnings surprise of 47.4%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for GIII’s current-year sales and EPS suggests growth of 1.9% and 0.4%, respectively, from the year-ago reported figures. It has a long-term earnings growth rate of 15%.
Bluegreen currently flaunts a Zacks Rank #1. BVH has a trailing four-quarter earnings surprise of 24.7%, on average. Shares of BVH have rallied 35.3% in the past year.
The Zacks Consensus Estimate for Bluegreen’s current financial-year sales and earnings suggests growth of 3.6% and 17.6%, respectively, from the year-ago period's reported figure.
Royal Caribbean currently sports a Zacks Rank of 1. RCL has a trailing four-quarter earnings surprise of 26.4%, on average. Shares of RCL have rallied 195.4% in the past year.
The Zacks Consensus Estimate for Royal Caribbean’s current financial-year sales and EPS suggests growth of 48.7% and 162.9%, respectively, from the year-ago period's reported numbers.