It’s that time of the day folks, when we play good news, bad news with Lululemon Athletica (LULU).
Now, for those of you who haven’t been following along, shares of Lululemon have dropped 30% so far this year, as the company has continued to wrestle with problems of its own making–the transparent yoga-pant fiasco stands out–and those shared with other retailers–its declining margins. There’s been good news along the way–a private equity firm took a big stake in Lululemon–but not enough to truly move the needle.
With that as out backdrop, JPMorgan analyst Matthew Boss and team found some good news and some bad news for investors in Lululemon. First the good news:
Based on our field work, lulu’s brand has a place domestically (w/ stores showing signs of progress and Google Trends pointing to steady improvement off the bottom) with International an untapped opportunity (PE holder Advent’s key competency) and our bottom-up top-line roadmap pointing to $3B+ by FY18 (w/ Intl to 10%+ from 5% in FY13).
The bad news: Gross margins won’t stop falling until 2016, Boss says: Continue reading >>