Lululemon Athletica, Inc. (NASDAQ: LULU)
Monday after the market closed, yoga-clothing maker Lululemon Athletica surprised investors with upgraded financial projections for the fourth quarter of 2015. LULU citing a robust Christmas holiday season increased both revenue and profit projections for the quarter. Investors rallied and drove the stock up 8.6% in after-hours trading.
Lululemon CEO Comments
“We had a very successful holiday season driven by strong execution in stores and online during the key holiday weeks. Sales for the fourth quarter are exceeding expectations and gross margin rates and expenses remain in line with prior guidance. We are looking forward to 2016 and will enter the year with a very strong leadership team across the company that is relentlessly driving our strategic priorities and long term vision,” said Laurent Potdevin, CEO of Lululemon Athletica. Yahoo Finance
LULU Analysis
While Lululemon’s revised forth quarter projections are good for the company and perhaps even the economy, the equity markets are in no mood to reward positive fundamentals. On the surface, pre-announcing positive numbers in such a profoundly bearish environment versus waiting until the numbers are due in February raises at least one question…’why?’ In any event, the stock is in play. LULU closed Monday at $54.73 and gapped up after-hours on the revised fourth quarter projections to a high of $59.45. The stock has not traded at these levels since the company reported second quarter earnings on September 10, 2015. At that time, LULU gapped down from $64.04 to $60.07 and sold off to a low of $52.88 and has yet to fill the gap. In Monday after-hours trading LULU paused around the 200-day simple moving average at $58.72. Going forward, for a bullish move, LULU needs to remain above this level. If buyers do take control and keep LULU above the 200-day SMA the stock will likely see resistance near the September gap levels of $61.22 and $64.05. On the other hand, if the markets continue to selloff, LULU will likely follow suit. There is support at $58.50 and $58. Below those levels the stock has tremendous pressure to close Monday’s after-hours gap.
Lululemon Company Profile
Lululemon Athletica inc. is a designer and retailer of technical athletic apparel. The Company offers a line of apparel and accessories for women, men and female youth. Its apparel assortment includes items, such as pants, shorts, tops and jackets designed for healthy lifestyle activities and athletic pursuits, such as yoga, running, general fitness and dance-inspired apparel for female youth. The Company conducts its business through two channels: corporate-owned stores and direct to consumer. The Company markets its athletic apparel under the lululemon athletica and ivivva athletica brand names. As of February 1, 2015, the Company’s retail footprint included 211 stores in the United States, 57 stores in Canada, 26 stores in Australia, five in New Zealand, two in the United Kingdom and one in Singapore. The Company’s retail stores are located primarily on street locations, in lifestyle centers and in malls. Google Finance
