Jefferies Cuts Numbers on Lululemon (LULU) Amid Still Elevated Promotions
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Jefferies analyst Randal Konik cut estimates and his price target on Hold-rated Lululemon Athletica Inc. (NASDAQ: LULU) to $61.00 (from $76.00) as data shows still elevated promotions, which threatens gross margins.
Konik commented, "The SKU count in the "We Made Too Much" section has been rising since May with an acceleration over the past few weeks, and escalated further last week. On 10/13/16 LULU added a significant amount of product to the clearance section (driving total clearance SKUs to over 300 from 239 in the prior week) and sent an uncharacteristic email blast to customers. SKUs were elevated vs. recent weeks and precedent online clearance events, esp. in Women's Tops, a major push for LULU as of late."
The firm is lowering 3Q'17 SSS (CC, inc. e-comm) to 4% (from 5%) and EPS to $0.42 (from $0.44). Thjey are also lowering 4Q'17 SSS to 3% (from 4%) and EPS to $0.98 (from $1.00). EPS estimates move to $2.07 and $2.45 for FY'17 and FY'18, respectively.
Shares of Lululemon Athletica Inc. closed at $57.77 yesterday.
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Related EntitiesJefferies & Co, Randal Konik
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